Local Government Academy

Department of Interior and Local Government

Course Book

PUBLIC-PRIVATE PARTNERSHIPS BY
LOCAL GOVERNMENT UNITS
LGU PPPs

Volume 2: Template Ordinances and

Executive Order
PPP, JV, Lease and Corporatization Ordinances
Executive Order on Timelines and Schedule

Alberto C. Agra

January 15, 2015

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Table of Contents

A. Proposed PPP Code

B. Proposed Joint Venture Ordinance

C. Proposed Lease Ordinance

D. Proposed Corporatization Ordinance

E. Proposed Executive Order on Timelines and Schedule

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 A. PROPOSED LGU PUBLIC-PRIVATE PARTNERSHIP CODE
November 23, 2014

Ordinance No. ____

Series of 20___

A PROVINCIAL/ CITY/ MUNICIPAL CODE PURSUING A PUBLIC-PRIVATE

PARTNERSHIP (PPP) APPROACH TOWARDS DEVELOPMENT, PROVIDING FOR THE
PROCEDURE FOR SELECTING THE PRIVATE SECTOR PROPONENT, ADOPTING A
CONTRACT MANAGEMENT FRAMEWORK, AND PROVIDING APPROPRIATIONS AND
FOR OTHER PURPOSES

WHEREAS, under Section 20, Article II of the 1987 Constitution, the State recognizes
the indispensable role of the private sector, encourages private enterprise, and
provides incentives to needed investments;

WHEREAS, the private sector participates in infrastructure, development and social

service-related projects of the State and local government units (LGUs) through what
is popularly known as Public-Private Partnerships (PPPs);

WHEREAS, Republic Act No. 7160 or the Local Government Code of 1991 and its
Implementing Rules, in particular Sections 17 (a), 18, 22 and 35, empower LGUs to
discharge functions and responsibilities as are necessary, appropriate, or incidental
to efficient and effective provisions of the basic services and facilities, to acquire,
develop, lease, encumber, alienate, or otherwise dispose of real or personal
property held by them in their proprietary capacity and to apply their resources and
assets for productive, developmental, or welfare purposes, in the exercise or
furtherance of their governmental or proprietary powers and functions and thereby
ensure their development into self-reliant communities and active participants in the
attainment of national goals, to enter into contracts and to enjoy full autonomy in
the exercise of their proprietary functions, and to enter into joint ventures with the
private sector, respectively;

WHEREAS, the Department of Interior and Local Government (DILG) Legal Opinion
No. 8, S. 2014 stated that that a duly enacted local legislation (PPP Code) must be
complied with in undertaking (its) PPP projects.

WHEREAS, according to the Department of Justice (DOJ) Opinion No. 18, S. 2012,
xxx local governments may enact their own Public-Private Partnership (PPP) Code
or omnibus ordinance outlining, among others, all applicable modalities. xxx A local
government, through an enabling ordinance, is free to act to address local concerns,
even without an enabling ordinance, provided no statute will be infringed;

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WHEREAS, In Legal Opinion No. 10, S. 2014, the DILG affirmed the above-quoted DOJ
Opinion and further said that, the LGUs discretion xxx is consistent with the state
policy of local autonomy and is in line with the operative principle of
decentralization and the national goal of propelling social and economic growth and
development through the active participation of the private sector;

WHEREAS, in furtherance of and consistent with local autonomy, fiscal autonomy,

the principle of subsidiarity, public good and welfare, general welfare, and full
autonomy over proprietary powers, the Province/ City/ Municipality is free, provided
no statute is violated, to adopt its definition of a PPP undertaking and prescribe the
requirements, procedures and conditions for Provincial/ City/ Municipal PPPs, and
incorporate these in an operative framework; and

WHEREAS, having a framework in ordinance form will ensure and facilitate

consistency, integrity, reliability, sustainability, accountability and transparency, and
enforceability;

NOW THEREFORE, on motion of Councilor (name), duly seconded by Councilor(s)

(name[s]),

BE IT ORDAINED, by the Sangguniang Panlalawigan/ Panlungsod/ Bayan of (name)

in session assembled that:

Chapter 1. Basic Principles and Definitions

SECTION 1. Short Title. This Ordinance shall be known as A PROVINCIAL/ CITY/

MUNICIPAL CODE PURSUING A PUBLIC-PRIVATE PARTNERSHIP (PPP) APPROACH
TOWARDS DEVELOPMENT, PROVIDING FOR THE PROCEDURE FOR SELECTING THE
PRIVATE SECTOR PROPONENT, ADOPTING A CONTRACT MANAGEMENT
FRAMEWORK, AND PROVIDING APPROPRIATIONS AND FOR OTHER PURPOSES and
cited as the Province/ City/ Municipality of (name) PPP Code.

Sec. 2. Declaration of Policy. (a) It is hereby declared as a policy that the Province/
City/ Municipality of (name) shall advance the public good and general welfare, and
promote the interest of the community and the Province/ City/ Municipality within
the framework of sustainable and integrated development, and effective
constructive engagement and meaningful peoples participation in local governance.

(b) PPPs shall be pursued by the Province/ City/ Municipality consistent with and in
furtherance of the vision and mission of the Province/ City/ Municipality which state
that:

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 VISION: (state vision)

MISSION: (state mission)

Sec. 3. Operative Principles. The accomplishment of the stated policy shall be

guided by the following principles:

(a) The Province/ City/ Municipality, pursuant to Sections 1, 2 and 5, Article X of the
1987 Constitution, is a territorial and political subdivision which enjoys local
autonomy and fiscal autonomy. Under Section 3, Article X of the 1987
Constitution, local autonomy means a more responsive and accountable local
government structure instituted through a system of decentralization. Fiscal
autonomy means that local governments have the power to create their own
sources of revenue in addition to their equitable share in the national taxes
released by the national government, as well as the power to allocate their
resources in accordance with their own priorities.

(b) The general welfare and the public good shall always be promoted and that
transparency, public accountability and social accountability mechanisms and
approaches shall be integrated in PPPs from inception to implementation.

(c) The Province/ City/ Municipality exists and operates in its governmental and
proprietary capacities thereby making the Province/ City/ Municipality an agent
of and is therefore accountable to the State and its community. The role of the
Province/ City/ Municipality both as a regulator of a business and as
implementer of a proprietary undertaking must be clearly delineated.

(d) The Province/ City/ Municipality must develop into a self-reliant community, and
as such, is in a better position to address and resolve matters that are local in
scope. The Province/ City/ Municipality is under the supervision of the President
and under the qualified control of Congress.

(e) Under Section 18 of the of Republic Act No. 7160 of the Local Government Code
of 1991 (1991 LGC), the Province/ City/ Municipality may acquire, develop, lease,
encumber, alienate, or otherwise dispose of real or personal property held by
them in their proprietary capacity and to apply their resources and assets for
productive, developmental, or welfare purposes.

(f) Under Section 22 (c) of the 1991 LGC, no contract may be entered into by the
Provincial Governor/ City Mayor/ Municipal Mayor on behalf of the Province/
City/ Municipality without prior authorization by the Sanggunian Panlalawigan/

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 Panlungsod/ Bayan. The participation of the Sanggunian is indispensable in the
adoption and implementation of a PPP arrangement.

(g) Under Section 22 (d) of the 1991 LGC, the Province/ City/ Municipality enjoys full
autonomy in the exercise of its proprietary functions and shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, those not otherwise prohibited by law and those which are essential
to the promotion of the general welfare.

(h) Under Section 25 (b) of the 1991 LGC, the Province/ City/ Municipality may
collaborate or cooperate with other local governments, national government
agencies, government-owned and controlled corporations, government
instrumentalities and government corporate entities for the implementation of
local projects.

(i) Under the charter of the Province/ City/ Municipality, Sections 16, 17, 19 and
129 of 1991 LGC and other statutes, the Province/ City/ Municipality has been
given the responsibility and mandate to exercise devolved and delegated
powers.

(j) The Province/ City/ Municipality, under Section 106 of 1991 LGC, is mandated to
draw up and implement a comprehensive multi-sectoral development plan. PPPs
shall be pursued by the Province/ City/ Municipality consistent with its
infrastructure, development, investment, environmental and governance
framework embodied in relevant policies, plans, ordinances and codes.

(k) The Province/ City/ Municipality, as a partner in a PPP arrangement, may provide
equity, subsidy or guarantee and use local funds; and the usage thereof for a PPP
project shall be considered for public use and purpose.

(l) Under Sections 34, 35 and 36 of the 1991 LGC and in the exercise of its powers,
the Province/ City/ Municipality may enter into joint ventures and such other
cooperative arrangements with people's and non-governmental organizations to
engage in the delivery of certain basic services, capability-building and livelihood
projects, and to develop local enterprises designed to improve productivity and
income, diversity agriculture, spur rural industrialization, promote ecological
balance, and enhance the economic and social well-being of the people; provide
assistance, financial or otherwise, to such people's and non-governmental
organizations for economic, socially-oriented, environmental, or cultural projects
to be implemented within its territorial jurisdiction.

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(m) The Province/ City/ Municipality, under Section 3 (l) of the 1991 LGC, is duty-
bound to ensure the active participation of the private sector in local
governance.

(n) The right of the people to information on matters of public concern is

guaranteed under Section 7, Article III of the 1987 Constitution. Furthermore, it
is the policy of the State to allow full public disclosure of all its transactions
involving public interest such as PPPs under Section 28, Article II of the 1987
Constitution.

(o) The peoples right to effective and reasonable participation and public trust
provision under Section 16, Article XIII and Section 1, Article XI, respectively, of
the 1987 Constitution guarantee and empower civil society groups to have
effective and meaningful participation in the regulation and management of PPP
projects.

Sec. 4. Rationale for PPP. PPPs shall be promoted to provide more, better,
affordable and timely services to the community. In pursuing PPPs, the Province/
City/ Municipality shall be guided by the following reasons and drivers:

(a) PPPs shall be undertaken in furtherance of the Provincial/ City/ Municipal

development and physical framework plan.

(b) PPP is an essential part of the overall infrastructure reform policy of the
Province/ City/ Municipality. By encouraging performance-based management of
the delivery of public services applying commercial principles and incentives
whenever possible, by introducing competition in and for the market, and by
involving users and stakeholders in the decision-making process, infrastructure
and regulatory reform shall be achieved.

(c) PPPs should be adopted to address a pressing and urgent or critical public need.
Under the principle of Additionality, the increased economic benefits to
consumer welfare of having needed public services and infrastructure accessible
now because of the PPP, rather than having to wait until the Province/ City/
Municipality could provide the public services much later. PPP would also
encourage the accelerated implementation of local projects.

(d) PPPs can be adopted to avoid costs and public borrowing. By contracting with
the private sector to undertake a new infrastructure project, scarce Provincial/
City/ Municipal capital budgets can be directed to other priority sectors such as
social services, education, and health care.

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(e) PPPs allow for technology transfer, and improved efficiency and quality of
service. These could be valuable contribution of the private sector in local
governance.

(f) PPPs should be feasible and affordable, demonstrating the need for the project,
broad level project costs estimation, and indicative commercial viability. The
assessment of affordability shall be the cornerstone for all PPP projects, both to
the Province/ City/ Municipality and the general public.

(g) PPP Projects should be bankable. High participation costs, unreasonable risk
transfer or lengthy and complex contract negotiations must be avoided. A cost
recovery pricing policy attractive to the private sector must be in place; provided
that the same will not be disadvantageous to government and public interest.

(h) PPP Projects should provide value-for-money and good economic value as far as
practicable, including allocation of risks to the party best able to control,
manage, mitigate or insure these risks, and maximization of the benefits of
private sector efficiency, expertise, flexibility and innovation.

(i) PPP Projects must provide economic and social benefits and should be evaluated
on this basis rather than on purely financial considerations. The Province/ City/
Municipality remains responsible for services provided to the public, without
necessarily being responsible for corresponding investment.

(j) PPP Projects must give consideration for empowerment of Filipino citizens as a
strategy for economic growth and sustainability and must thus provide for the
participation of local investors to the furthest extent practicable given the nature
of the project. The Province/ City/ Municipality shall also ensure the hiring and
employment of local labor in the PPP venture.

(k) Procurement of PPP Projects must be competitive and must be undertaken

through open competitive bidding. Competition must be legitimate, fair and
honest. In the field of government contract law, competition requires, not only
bidding upon a common standard, a common basis, upon the same thing, the
same subject matter, the same undertaking, but also that it be legitimate, fair
and honest; and not designed to injure or defraud the government. Where
competitive bidding cannot be applied, a competitive process ensuring both
transparency and economically efficient outcome must be employed.

(l) The regulation of the PPP shall be pursuant to the PPP contract and exercised by
the appropriate regulatory authority. A duly executed and legal PPP Contract
shall be respected and not impaired, and shall be binding on the successor
administration pursuant to the provision on corporate succession. Procedures,

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 activities and steps duly undertaken by the Provincial Governor/ City Mayor/
Municipal Mayor, PPP-SC, Sangguniang Panlalawigan/ Panlungsod/ Bayan
pursuant to this Ordinance shall be continued by the successor Administration.
Any amendment or revision to this Ordinance by the next Administration shall
not in any way prejudice vested and contractual rights of the Province/ City/
Municipality and the PSPs as to the substance of agreements signed,
certifications issued, resolutions issued and procedures undertaken.

(m) To provide efficient public service, the Province/ City/ Municipality must ensure,
through stronger performance management and guidance, proper
implementation of PPP contracts that will result in value for money, on-time
delivery of quality services to the public, achievement of government policy
goals, all within sustainable and integrated development.

Sec. 5. Definition of Terms. As used in this Code, the following terms shall mean:

(a) Build-Operate-Transfer Law Scheme - Under Republic Act No. 6957 as amended
by RA No. 7718, the following are the BOT Law variants:

(i) Build-and-Transfer (BT) - A contractual arrangement whereby the

Private Sector Proponent (PSP) undertakes the financing and
construction of a given infrastructure or development facility, and
after its completion, turns it over to the Province/ City/ Municipality,
which shall pay the PSP, on an agreed schedule, its total investment
expended on the project, plus a Reasonable Rate of Return thereon.

(ii) Build-Lease-and-Transfer (BLT) - A contractual arrangement whereby

a PSP is authorized to finance and construct an infrastructure or
development facility and upon its completion, turns it over to the
Province/ City/ Municipality on a lease arrangement for a fixed
period, after which ownership of the facility is automatically
transferred to the Province/ City/ Municipality.

(iii) Build-Operate-and-Transfer (BOT) - A contractual arrangement

whereby the PSP undertakes the construction, including financing, of
a given infrastructure facility, and the operation and maintenance
thereof. The PSP operates the facility over a fixed term, during which
it is allowed to charge facility users appropriate tolls, fees, rentals,
and charges not exceeding those proposed in its bid, or as negotiated
and incorporated in the contract, to enable the PSP to recover its
investment, and its operating and maintenance expenses in the
project. The PSP transfers the facility to the Province/ City/

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 Municipality at the end of the fixed term which shall not exceed fifty
(50) years. This build, operate and transfer contractual arrangement
shall include a supply-and-operate scheme, which is a contractual
arrangement whereby the supplier of equipment and machinery for a
given infrastructure facility, if the interest of the Province/ City/
Municipality so requires, operates the facility, providing, in the
process, technology transfer and training to Filipino nationals.

(iv) Build-Own-and-Operate (BOO) - A contractual arrangement whereby

a PSP is authorized to finance, construct, own, operate and maintain
an infrastructure or development facility from which the PSP is
allowed to recover its total investment, operating and maintenance
costs plus a reasonable return thereon by collecting tolls, fees, rentals
or other charges from facility users. Under this project, the proponent
who owns the assets of the facility may assign its operation and
maintenance to a facility operator. The divestiture or disposition of
the asset or facility shall be subject to relevant rules of the
Commission on Audit (COA).

(v) Build-Transfer-and-Operate (BTO) - A contractual arrangement

whereby the Province/ City/ Municipality contracts out the
construction of an infrastructure facility to a PSP such that the
contractor builds the facility on a turnkey basis, assuming cost
overruns, delays, and specified performance risks. Once the facility is
commissioned satisfactorily, title is transferred to the Province/ City/
Municipality. The PSP, however, operates the facility on behalf of the
Province/ City/ Municipality under an agreement.

(vi) Contract-Add-and-Operate (CAO) - A contractual arrangement

whereby the PSP adds to an existing infrastructure facility which it is
renting from the Province/ City/ Municipality and operates the
expanded project over an agreed franchise period. There may or may
not be a transfer arrangement with regard to the added facility
provided by the PSP.

(vii) Develop-Operate-and-Transfer (DOT) - A contractual arrangement

whereby favorable conditions external to a new infrastructure project
to be built by a PSP are integrated into the arrangement by giving that
entity the right to develop adjoining property, and thus, enjoy some
of the benefits the investment creates, such as higher property or
rent values.

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 (viii) Rehabilitate-Operate-and-Transfer (ROT) - A contractual arrangement
whereby an existing facility is turned over to the PSP to refurbish,
operate and maintain for a franchise period, at the expiry of which
the legal title to the facility is turned over to the Province/ City/
Municipality.

(ix) Rehabilitate-Own-and-Operate (ROO) - A contractual arrangement

whereby an existing facility is turned over to the PSP to refurbish and
operate, with no time limitation imposed on ownership. As long as
the operator is not in violation of its franchise, it can continue to
operate the facility in perpetuity.

(b) Competitive Challenge or Swiss Challenge - An alternative selection process

wherein third parties or challengers shall be invited to submit comparative
proposals to an unsolicited proposal. Accordingly, the PSP who submitted the
unsolicited proposal, or the original proponent, is accorded the right to match
any superior offers given by a comparative PSP.

(c) Competitive Negotiations - Refers to a process where the Province/ City/

Municipality negotiates with eligible and qualified PSPs and awards the project to
that PSP which offers the best combination of quality and price.

(d) Competitive Selection or Bidding or Open Competition - Refers to a method of

selection or procurement initiated and solicited by the Province/ City/
Municipality, based on a transparent criteria, which is open to participation by
any interested party.

(e) Concession - A contractual arrangement whereby the financing and construction

of a new facility and/ or rehabilitation of an existing facility is undertaken by the
PSP after turnover thereof to it, and includes the operation, maintenance,
management and improvement, if any, of the facility for a fixed term during
which the PSP generally provides service directly to facility users and is allowed
to charge and collect the approved tolls, fees, tariffs, rentals or charges from
them. The Province/ City/ Municipality may receive a concession or franchise fee
during the term of the contract and/ or other consideration for the transfer,
operation or use of any facility. There may be a transfer of ownership of the
asset or facility after the concession period has ended subject to rules of the
COA.

(f) Corporatization - Refers to transformation of a public entity or quasi-municipal

corporation established by the Province/ City/ Municipality into one that has the
structure and attributes of a private corporation, such as a board of directors,
officers, and shareholders, and having it registered with the Securities and

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 Exchange Commission as a stock corporation. The process involves the
establishment of a distinct legal identity for the company under which the
Provinces/ Citys/ Municipalitys role is clearly identified as owner; segregation
of the companys assets, finances, and operations from other Provincial/ City/
Municipal operations; and development of a commercial orientation and
managerial independence while remaining accountable to the government or
electorate.

(g) Cost Sharing This shall refer to the Province/ City/ Municipality portion of
capital expenses associated with the establishment of an infrastructure
development facility such as the provision of access infrastructure, right-of-way,
and any partial financing of the project.

(h) Credit Enhancement - This shall refer to direct and indirect support to a
development facility by the PSP and/or Province/ City/ Municipality, the
provision of which is contingent upon the occurrence of certain events and/or
risks, as stipulated in the PPP contract. Credit enhancements are allocated to the
party that is best able to manage and assume the consequences of the risk
involved. Credit enhancements may include but are not limited to government
guarantees on the performance or the obligation of the Province/ City/
Municipality under its contract with the PSP, subject to existing laws on indirect
guarantees. Indirect Guarantees shall refer to an agreement whereby the
Province/ City/ Municipality assumes full or partial responsibility for or assists in
maintaining the financial standing of the PSP or project company in order that
the PSP/ project company avoids defaulting on the project loans, subject to
fulfillment of the PSP/ project company of its undertakings and obligations under
the PPP contract.

(i) Developmental Projects Provincial/ City/ Municipal Projects normally financed

and operated by the Province/ City/ Municipality, but which will now be wholly
or partly financed, constructed and/ or operated by the PSP; projects that will
advance and promote the general welfare and public good; projects and
activities that will be responsive to the needs of the communities; projects that
will raise revenues for the Province/ City/ Municipality; projects in furtherance of
devolution, deconcentration and decentralization; and other infrastructure,
social-related and developmental projects as may be authorized by the Province/
City/ Municipality.

(j) Direct Provincial/ City/ Municipal Equity - Refers to the subscription by the
Province/ City/ Municipality of shares of stock or other securities convertible to
shares of stock of the special purpose vehicle or single-purpose project company,
whether such subscription will be paid by money or assets.

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(k) Direct Provincial/ City/ Municipal Guarantee - Refers to an agreement whereby
the Province/ City/ Municipality guarantees to assume responsibility for the
repayment of debt directly incurred by the PSP in implementing the project in
case of a loan default.

(l) Direct Provincial/ City/ Municipal Subsidy - Refers to an agreement whereby the
Province/ City/ Municipality shall: (a) defray, pay or shoulder a portion of the PPP
project cost or the expenses and costs in operating and maintaining the project;
(b) condone or postpone any payments due from the PSP; (c) contribute any
property or assets to the project; (d) waive or grant special rates on real property
taxes on the project during the term of the contractual arrangement; and/ or (e)
waive charges or fees relative to the business permits or licenses that are to be
obtained for the construction of the project, all without receiving payment or
value from the PSP or operator for such payment, contribution or support.

(m) Divestment or Disposition - Refers to the manner or scheme of taking away,

depriving, withdrawing of title to a property owned by the Province/ City/
Municipality and vesting ownership thereof to a PSP.

(n) Feasibility or Project Study (FS) - A study, full or pre-feasibility study or business
case prepared by the Province/ City/ Municipality in a competitive selection or a
PSP when submitting an unsolicited proposal, containing or indicating a needs
analysis, affordability assessment, value for money assessment, preliminary risk
assessment, stakeholder assessment, human resource assessment, bankability
assessment, legal viability assessment, PPP mode selection, market testing if
relevant, indicative transaction implementation plan, and draft PPP contract. The
study may be supported by the results of the appropriate willingness-and-
ability-to-pay survey. The Project Study can be a feasibility study, pre-feasibility
study or business case.

(o) Franchise - Refers to the right or privilege affected with public interest which is
conferred upon a PSP, under such terms and conditions as the Province/ City/
Municipality may impose, in the interest of public welfare, security and safety.

(p) Joint Venture (JV) - A contractual arrangement whereby a PSP or a group of

private sector entities on one hand, and the Province/ City/ Municipality on the
other hand, contribute money/ capital, services, assets (including equipment,
land, intellectual property or anything of value), or a combination of any or all of
the foregoing. The Province/ City/ Municipality shall be a minority equity or
shareholder while the PSP shall be majority equity or shareholder. Each party
shall be entitled to dividends, income and revenues and will bear the
corresponding losses and obligations in proportion to its share. Parties to a JV
share risks to jointly undertake an investment activity in order to accomplish a

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 specific, limited or special goal or purpose with the end view of facilitating
private sector initiative in a particular industry or sector, and eventually
transferring ownership of the investment activity to the PSP under competitive
market conditions. It involves a community or pooling of interests in the
performance of the service, function, business or activity, with each party having
a right to direct and govern the policy in connection therewith, and with a view
of sharing both profits and losses, subject to agreement by the parties.

(q) Lease or Affermage - A contractual arrangement providing for operation,

maintenance, and management services by the PSP, including working capital
and/ or improvements to an existing infrastructure or development facility
leased by the PSP from the Province/ City/ Municipality for a fixed term. Under a
lease, the PSP retains revenue collected from customers and makes a specified
lease payment to the Province/ City/ Municipality. Under an affermage, the
parties share revenue from customers wherein the PSP pays the contracting
authority an affermage fee, which varies according to demand and customer
tariffs, and retains the remaining revenue. The Province/ City/ Municipality may
provide a purchase option at the end of the lease period subject to rules of the
COA.

(r) Limited Negotiations - Refers to a process whereby the Province/ City/

Municipality negotiates with the PSP in instances when there is only one eligible
and qualified PSP in a competitive selection process, under Stage 2 of the
competitive challenge process, or when there is a prior completed competitive
process.

(s) Management Contract - A contractual arrangement involving the management

or provision by the PSP of operation and maintenance or related services to an
existing infrastructure or development facility owned or operated by the
Province/ City/ Municipality. The PSP may be compensated by the Province/ City/
Municipality using the funds of the latter; or the PSP may collect tolls/ fees/
rentals and charges which shall be turned over to the Province/ City/
Municipality and shall be compensated in the form of a fixed fee, a share in the
revenues and/ or performance-based management or service fee during the
contract term.

(t) Negotiated Projects - Refer to instances where the desired project is the result of
an unsolicited proposal from a PSP or, where the Province/ City/ Municipality has
failed to identify an eligible private sector partner for a desired PPP activity when
there is only one qualified bidder after subjecting the same to a competitive
selection or bidding.

(u) New Technology - Refers to having at least one of the following attributes:

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 a. A recognized process, design, methodology or engineering concept which has
demonstrated its ability to significantly reduce implementation of construction
costs, accelerate project execution, improve safety, enhance project
performance, extend economic life, reduce costs of facility maintenance and
operations, or reduce negative environmental impact or social/ economic
disturbances or disruptions during either the project implementation/
construction phase or the operation phase; or

b. A process for which the project proponent or any member of the proponent
joint venture/ consortium possesses exclusive rights, either world-wide or
regionally; or

c. A design, methodology or engineering concept for which the proponent or a

member of the proponent consortium or association possesses intellectual
property rights.

(v) Private Sector Proponent (PSP) - Refers to the private sector entity which shall
have contractual responsibility for the project and which shall have an adequate
track record in the concerned industry, as well as technical capability and
financial base consisting of equity and firm commitments from reputable
financial institutions, to provide, upon award, sufficient credit lines to cover the
total estimated cost of the project to implement the said project.

(w) Public-Private Partnerships (PPP) - PPP is a form of legally enforceable contract

between the Province/ City/ Municipality and a PSP, requiring new investments
from the PSP and transferring key risks to the PSP in which payments are made in
exchange for performance, for the purpose of delivering a service provided or
intended to be provided by the Province/ City/ Municipality. PPP shall also
include dispositions of an asset, facility, project owned, or entity created by the
Province/ City/ Municipality to a PSP; procurement of a service; assumption by a
PSP of a proprietary function of the Province/ City/ Municipality; grant of a
concession or franchise to a PSP by the Province/ City/ Municipality; or usage by
the PSP of public property owned or possessed by the Province/ City/
Municipality.

Alternatively, a PPP is a legally enforceable contract where each party assumes

specified functions, bears certain risks, provides contribution or renders some
obligation, and earns benefits and revenues from the PPP arrangement.

(x) PPP Contract - Whenever appropriate, the PPP Contract shall contain the
Preambulatory Clauses or Whereas Clauses, Party Clause, Rules of Interpretation,
Nature of the PPP, Term of the Project, Contract Objective, Performance Bonds,

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 Key Performance Indicators, Risk Allocation, Rights, Payment to PSE or PSP, Tariff
Scheme, Subsidy or Support Mechanism, Insurance Requirements, Delay
Provisions, Force Majeure, Governmental Action, Government and Public Sector
Entity (PSE) Warranties, PSP Warranties, Change in the Law, Regulatory Regime,
Variations, Termination, Indemnification, Intellectual Property, Claims, Financial
security, Dispute Resolution, Step-in Rights, Changes in the Composition of the
PSP/ Service Provider, Partnership Management, Compliance with all Laws,
Personnel, Conditions Precedent, among others.

(y) Reasonable Rate of Return (RROR) - Refers to the rate of return that a PSP shall
be entitled to, as determined by the PPP Regulatory Authority taking into
account, among others, the prevailing cost of capital (equity and borrowings) in
the domestic and international markets, risks being assumed by the PSP and the
level of Provincial/ City/ Municipal undertakings and contributions extended for
the project.

(z) Rehabilitate-Lease-and-Transfer (RLT) - A contractual arrangement whereby an

existing facility is turned over to the PSP to refurbish and operate, and upon its
completion, turns it over to the Province/ City/ Municipality on a lease
arrangement for a fixed period, after which ownership of the facility is
automatically transferred to the Province/ City/ Municipality.

(aa) Rehabilitate-and-Transfer (RT) - A contractual arrangement whereby an

existing facility is turned over to the PSP to refurbish and operate, and after its
completion, turns it over to the Province/ City/ Municipality, which shall pay the
PSP, on an agreed schedule, its total investment expended on the project, plus a
reasonable rate of return thereon.

(bb) Rehabilitate-Transfer-and-Operate (RTO) - A contractual arrangement

whereby an existing facility is turned over to the PSP to refurbish and operate.
Once the facility is commissioned satisfactorily, title is transferred to the
Province/ City/ Municipality. The PSP, however, operates the facility on behalf of
the Province/ City/ Municipality under an agreement.

(cc) Service Contract - A contractual arrangement whereby the PSP shall provide a
particular service to the Province/ City/ Municipality involving the Provinces/
Citys/ Municipalitys proprietary authority or to entities or corporation created
by the Province/ City/ Municipality. The PSP shall be entitled to be paid a fee per
unit of work done during the term of the contract; or compensated by the
Province/ City/ Municipality using the funds of the latter; or the PSP may collect
tolls/ fees/ rentals and charges which shall be turned over to the Province/ City/
Municipality and shall be compensated in the form of a share in the revenues.

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(dd) Unsolicited Proposal - Refers to project proposals submitted by a PSP to the
Province/ City/ Municipality to undertake Developmental Projects without a
formal solicitation issued by the Province/ City/ Municipality whereby the
negotiated terms shall be subjected to comparative proposals.

(ee) Value for Money (VfM) - Refers to the concept that over the whole-life of a
project finance-PPP project, governments total expenditures (i.e., its payments
to the private sector), adjusted for the risks that have been transferred to the
private sector, will be less, on a Net Present Value (NPV) basis, than if the
government will perform the services itself. VfM considers monetary and non-
monetary factors such as: (i) risk transfer; (ii) reduced whole life costs; (iii) speed
of implementation; and (iv) quality and reliability of service.

(ff) Viability Gap Funding (VGF) - Refers to an explicit subsidy that is performance-
driven (i.e., based on private party achieving measurable outputs) and targeted
to socio-economically disadvantaged users or groups of users; or any financial
support in the form of grants or assistance, one time or deferred, to
infrastructure projects undertaken through PPPs with a view to make them
commercially viable.

Sec. 6. Rules of Interpretation. This Code and the provisions hereof shall be liberally
interpreted to accomplish the policy and objectives set forth in Sections 2, 3 and 4
hereof.

Sec. 7. Authorities. (a) This Code is being adopted pursuant to the Provinces/
Citys/ Municipalitys constitutional and statutory authorities enumerated under
Section 3 hereof; and when not inconsistent with the relevant laws aforementioned,
shall govern the adoption and implementation of the PPP Modalities.

(b) In pursuing BOT Law variants, the Province/ City/ Municipality shall comply with
Republic Act No. 6957 as amended by RA No. 7718 (BOT Law) and its Implementing
Rules and Regulations.

(c) In entering into Management and Service Contracts where provincial/ city/
municipal funds are used, the Province/ City/ Municipality shall comply with
Republic Act 9184 or the Government Procurement Reform Act (GPRA) and its
Implementing Rules and Regulations.

(d) For Dispositions, COA Circular No. 89-296 (January 27, 1989) shall govern.

17
(e) For Corporatization, the incorporation of the corporation must be done in
accordance with the Corporation Code of the Philippines.

(f) For Local Concessions, Rehabilitate-and-Transfer, Rehabilitate-Lease-and-

Transfer, and Rehabilitate-Transfer-and-Operate, Management and Service
Contracts where Provincial/ City/ Municipal funds are not used to procure the
services of the contractor or consultant, the Provincial/ City/ Municipal ordinances
policies or ordinances will be the governing instrument.

(g) For Joint Ventures, Section 35 of the 1991 LGC and Article 66 of the Implementing
Rules and Regulations of the 1991 LGC shall be governing law, and Law on
Partnerships of the Civil Code of the Philippines shall apply suppletorily.

(h) For Leases and Affermage, the Law on Leases of the Civil Code of Philippines may
be referred to.

Chapter 2. PPP Projects and PPP Modalities

Sec. 8. PPP Projects. (a) The Province/ City/ Municipality, through the appropriate
and viable PPP mode, may undertake Developmental Projects, including but not
limited to, energy and power, renewable energy, waste-to-energy, roads, bridges,
causeways, waterways, highways, ports, wharfs, terminals, airports, community
airports, canals, dams, desilting, dredging, mining and exploration, hydropower
projects, water supply and distribution, sewerage, irrigation, drainage, water
conservation such as impoundment areas and rainwater harvesting,
telecommunications, railroad and railways, short-haul transit services such as
monorail, guided bus, bus services and trams, intermodal and multi-modal transit
systems, transport systems, traffic control and management, parking facilities,
reclamation projects, platform settlements, industrial estates or townships, central
business and industrial park development, hotels and resorts, socialized housing,
non-conventional low-cost housing, settlement/ resettlement and relocation
facilities, residential subdivisions, parks and open space development/
redevelopment, pocket parks, public art, libraries, heritage conservation,
government buildings, sustainable/ green public buildings, sports facilities, wellness
establishments, tourism such eco-tourism, wellness tourism and agri/agro-tourism,
public markets, commercial buildings, slaughterhouses, storage buildings,
warehouses, cold storage, solid waste management, sanitary landfills, meeting and
convention centers, information technology networks and database infrastructure,
education-related, classrooms, health facilities, hospitals, social services-related,
prisons, agriculture-related, post-harvest facilities, environmental management and
protection, climate change adaption, disaster risk reduction, among other
developmental projects.

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(b) The determination of the appropriateness and viability of the PPP mode shall be
specified, explained and justified in the feasibility or project study weighing all the
relevant value drivers and reasons for pursuing a PPP project.

(c) Parties to PPP arrangement shall undertake an activity in order to accomplish

either an integrated or multi-use arrangement or specific goal or purpose with the
end view of serving the public good or generating revenues.

Sec. 9. List of Priority Projects. The Province/ City/ Municipality shall identify
specific priority developmental projects that may be undertaken under any of the
PPP Modalities defined under Sec. 10 hereof.

Sec. 10. PPP Modalities. In undertaking a specific PPP Project, the Province/ City/
Municipality may adopt and pursue any of the following PPP Modalities and provide
for other modalities not inconsistent with law:

1. Build-and-Transfer (BT);
2. Build-Lease-and-Transfer (BLT);
3. Build-Operate-and-Transfer (BOT);
4. Build-Own-and-Operate (BOO);
5. Build-Transfer-and-Operate (BTO);
6. Contract-Add-and-Operate (CAO);
7. Develop-Operate-and-Transfer (DOT);
8. Rehabilitate-Operate-and-Transfer (ROT);
9. Rehabilitate-Own-and-Operate (ROO);
10. Rehabilitate-Lease-and-Transfer (RLT);
11. Rehabilitate-and-Transfer (RT);
12. Rehabilitate-Transfer-and-Operate (RTO);
13. Concession Arrangement;
14. Joint Venture (JV);
15. Lease or Affermage;
16. Management Contract;
17. Service Contract;
18. Divestment or Disposition;
19. Corporatization; and
20. Any other modality akin to any of the above or features thereof which falls
under the alternative definition of a PPP under Section 5 (u) hereof.

Sec. 11. General Requirements. These are the general requirements for the
Province/ City/ Municipality in entering into PPPs:

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(a) Undertaking a PPP for a Development Project must be premised on any or all of
the reasons and drivers mentioned in Section 4 hereof.

(b) The list of projects to be implemented by the Province/ City/ Municipality under
any of the BOT Law variants shall be submitted for confirmation to the Provincial/
City/ Municipal Development Council for projects costing above Twenty up to Fifty
Million Pesos; above Fifty Million up to Two Hundred Million Pesos to the regional
development councils; and those above Two Hundred Million Pesos to the
Investment Coordination Committee of the National Economic and Development
Authority (NEDA).

(c) Projects included in the List of Priority Projects shall not be eligible for unsolicited
proposals under any of the BOT Law variants, unless involving a new concept or
technology; provided, that for any of the other PPP Modalities, unsolicited proposals
may be accepted even if the project is included in the List of Priority Projects or
whether the same features a new concept or technology or not.

(d) The prohibition for extending Direct Provincial/ City/ Municipal Guarantee, Direct
Provincial/ City/ Municipal Subsidy and Direct Provincial/ City/ Municipal Equity only
applies to unsolicited proposals for BOT Law variants under Republic Act No. 6957 as
amended by RA No. 7718.

(e) For BOT Law variants that will be subjected to bidding, Concession Arrangements,
Leases or Affermage, Management and Service Contracts, and Joint Ventures, the
Province/ City/ Municipality may provide Direct Provincial/ City/ Municipal
Guarantee, Direct Provincial/ City/ Municipal Subsidy, Direct Provincial/ City/
Municipal Equity, or Viability Gap Funding; provided, that the Province/ City/
Municipality can use a portion of its general fund, its development fund comprising
20% of it annual share in the Internal Revenue Allotment, and/ or its equitable share
in the proceeds of the utilization and development of the national wealth found
within its territory for this purpose; provided further, that any amount used for
subsidy or equity for a PPP project shall be deemed for development purposes and
for the direct benefits of the inhabitants pursuant to Sections 287 and 294 of the
1991 LGC respectively.

(f) For all PPP Modalities, the Province/ City/ Municipality may provide Credit
Enhancements and Cost-Sharing schemes.

(g) Official Development Assistance (ODA) as defined in R.A. 8182, otherwise known
as the ODA Act of 1996, as amended by R.A. 8555, may be availed of for PPP projects
where there is difficulty in sourcing funds; provided, that ODA financing shall not
exceed 50% of the project cost, with the balance to be provided by the PSP.

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(h) Any subsidy to the constituents that will be extended by the Province/ City/
Municipality must be targeted, transparent and efficiently administered.

(i) Each PPP Modality adopted for a specific PPP project must specifically provide and
adopt a tariff-mechanism such as but not limited to cash-needs, price cap, revenue
cap, rate of return, hybrid of the foregoing, or any other appropriate scheme.

(j) For negotiated contracts for BOT Law variants for public utility projects which are
monopolies, the rate of return on rate base shall be determined by existing laws,
which in no case shall exceed twelve per centum [12%].

(k) In case of a project requiring a franchise or license to operate, the winning PSP
shall automatically be granted by the Province/ City/ Municipality the franchise or
license or permit to operate and maintain the facility, including the collection of
tolls, fees, rentals, and other charges in accordance with the schedules stipulated in
the approved PPP contract. In case a JV Company is formed, the franchise,
concession or license shall be automatically granted to the JV Company. Upon the
signing of the JV Agreement by the Governor/ Mayor pursuant to the authority given
by the Sangguniang Panlalawigan/ Panlungsod/ Bayan, the franchise, concession or
license is deemed awarded to the winning PSP, in case of a contractual JV, or the JV
company. The original franchise period as stipulated in the contract agreement may
be extended, as may be authorized by the Province/ City/ Municipality, provided
that the total franchise period shall not exceed fifty (50) years.

(l) The Province/ City/ Municipality shall have the option to form or allow the
formation of a special purpose vehicle or single-purpose project company to
implement the PPP project as may be appropriate under the chosen PPP Modality.

(m) In participating in PPPs, the Province/ City/ Municipality may, subject to Sections
16, 17, 18, 19 and 20 of the 1991 LGC, exercise police power, perform devolved
powers, power to apply and generate resources, expropriate and reclassify and
enact or integrate zoning ordinances.

(n) The Province/ City/ Municipality shall prescribe and impose Procurement Ethics
to be followed by the Province/ City/ Municipality and all bidders based on the
principles of honesty, integrity, probity, diligence, fairness, trust, respect and
consistency for all PSPs and bidders.

(o) In a JV or appropriate modality, the co-venturers or parties to a JV shall

contribute money, capital, services, personnel, assets including equipment, land,
intellectual property or anything of value, or a combination of any or all of the

21
foregoing to the JV arrangement. The contribution of the Province/ City/
Municipality shall be subject to third party independent valuation. Further:

(i) The Province/ City/ Municipality may allocate a portion of its Internal
Revenue Allotment, real property tax, development fund, regular
funds, proceeds from the utilization and development of its national
wealth, Special Education Fund when the JV project is education-
related, Calamity Fund when the JV project is calamity- or
reconstruction-related, and special funds, if appropriate, as its
contribution or share in the JV activity. These may be the actual or
current funds, or future or monetized value of these funds of the
Province/ City/ Municipality.

(ii) The Province/ City/ Municipality may contract a loan, avail of Official
Development Assistance, secure grants, issue bonds, debentures,
securities, collaterals, and notes the proceeds of which can be
earmarked for the JV activity.

(iii) On the part of the Province/ City/ Municipality, in addition to the

foregoing contributions, it may extend goodwill, free carry, grant a
franchise, concession, usufruct, right-of-way, equity, subsidy or
guarantee, provide cost-sharing and credit enhancement
mechanisms, exercise police power, give tax incentives or tax
holidays, perform devolved powers, expropriate and reclassify and
enact or integrate zoning ordinances.

(iv) The Province/ City/ Municipality shall be a minority equity or

shareholder while the PSP shall be majority equity or shareholder,
except in the case where fifty percent (50%) of the outstanding capital
stock or contribution is owned or made by the Province/ City/
Municipality. A reasonable percentage of the equity to be provided by
the PSP should come from its own resources and not borrowed.

(v) Notwithstanding having only a minority share or equity, the written

consent of the Province/ City/ Municipality may be obtained, based
on the JVA, prior to any divestment of any asset or facility,
dissolution, transfer or sale of share or equity on the part of the PSP,
purchases or transactions beyond prescribed thresholds, or other
activities which may affect the rights and stake in the Project of the
Province/ City/ Municipality.

(vi) Any cost avoidance or substantial savings that will be made by the
Province/ City/ Municipality because of and directly attributable to

22
 the JV activity may be factored in the computation of the respective
shares of the Province/ City/ Municipality and the PSP.

(vii) For the utilization and development of natural resources located

within its jurisdiction, the Province/ City/ Municipality shall be
entitled to an equitable share which may come in the form of a
portion of the benefits, revenues and profits thereof.

(viii) The share of each JV party shall be set as fixed or determinable

percentages or values either based on an overall or across-the-board
assignment of contributions, revenues, profits, losses, risks and
functions; or on specific assignment of contributions and functions to
each JV party, provided that, the agreed percentage share is
maintained and that joint governance is ensured where the Province/
City/ Municipality shall have representation in the governing structure
based on in proportionate share at the minimum.

(ix) Subject to the terms of the competitive selection process and

agreement of the parties, the Province/ City/ Municipality may be
entitled to a share greater than its contribution or equity.

(x) Each party shall be entitled to dividends, profits, income and revenues
and will bear the corresponding risks, losses and obligations in
proportion to its share, either based on gross or net revenues or
income, unless the parties agree that the Province/ City/ Municipality
will have a greater share in the dividends, profits, income and
revenues and/ or bear lower risk and percentage loss than what it
contributes to the JV arrangement.

(xi) For as long as the Province/ City/ Municipality is involved in the JV

undertaking, the PSP shall not sell/transfer its interest in the JV
Company without the express written consent of the Province/ City/
Municipality.

(xii) The share or equity of the Province/ City/ Municipality in the JV

arrangement may be advanced, in full or in part, by the PSP where the
PSP shall be paid from the future revenues due the Province/ City/
Municipality either by set-off or actual payment.

(xiii) The JV activity may, subject to the terms of the competitive selection
process, include the divestment, disposition or transfer of ownership
of the JV activity, equity, asset or project to the PSP or JV partner. The

23
 divestment or disposition may take place at the end of the JV period
or before the term ends.

(p) Procurement made by the Province/ City/ Municipality using public funds shall be
subject to the GPRA and its Revised Implementing Rules and Regulations.
Procurement made by the PSP using private funds shall not be covered by said
statute.

(g) The revenues, funds, expenditures and contributions of the Province/ City/
Municipality shall be subject to the audit examination by the COA. Revenues, funds,
expenditures and contributions of the PSP shall be subject to audit by a private
auditing firm.

[Alternatively, the revenues, funds, expenditures and contributions from the

Province/ City/ Municipality and from the PSP are subject to audit by the COA.]

(h) Any subsidy, guarantee, equity or contingent liability assumed or given by the
Province/ City/ Municipality must be reflected, disclosed and recognized in the
annual appropriations of the Province/ City/ Municipality.

Sec. 12. Government-to-Government Joint PPP Undertakings. The Province/ City/

Municipality by mutual agreement in a Government-to-Government arrangement
with other local governments, national government agencies, government-owned
and -controlled corporations, government instrumentalities and government
corporate entities, may implement PPP Projects for projects located within the
Provinces/ Citys/ Municipalitys territory or those projects that will benefit the
Province/ City/ Municipality and its community even if the project site is outside the
Provinces/ Citys/ Municipalitys territory; provided, that the collaborating or
partner government entity jointly undertakes with the Province/ City/ Municipality
the selection of the PSP using the appropriate PPP Modality.

Chapter 3. PPP Procedures and PPP Contract

Sec. 13. PPP Procedures. The following procedures shall apply: (a) For BOT Law
variants, the Province/ City/ Municipality must comply with the procedure set forth
in Republic Act No. 6957 as amended by RA No. 7718 and its Implementing Rules
and Regulations.

(b) For Management and Service Contracts where Provincial/ City/ Municipal funds
will be used, the Province/ City/ Municipality shall comply with Republic Act No.

24
9184 or the Government Procurement Reform Act and its Implementing Rules and
Regulations.

(c) For Concessions, Leases or Affermage, and Management and Service Contracts
where public funds are not used to procure the services of the contractor or
consultant, competitive selection, limited negotiations, competitive negotiations or
competitive challenge as defined herein may be utilized to select the PSP.
.
(d) For Joint Ventures, Rehabilitate-Transfer, Rehabilitate-Lease-and-Transfer and
Rehabilitate-Transfer-and-Operate, competitive selection, limited negotiations or
competitive challenge as defined herein may be utilized to select the PSP/ JV
partner.

(e) For Divestment or Disposition of a property, COA Circular No. 89-296 (January 27,
1989) shall be applicable.

(f) For the Divestiture of a subsidiary or corporation incorporated by the Province/

City/ Municipality under Corporatization, the sale may be pursued via a public
offering or through a public auction or other relevant schemes under COA Circular
No. 89-296 (January 27, 1989).

(g) If the Province/ City/ Municipality opts to select a PSP using either Competitive
Selection or Competitive Challenge, the Province/ City/ Municipality in the
Competitive Selection and Competitive Negotiations, and the PSP in the Competitive
Challenge approach must prepare and submit a Feasibility or Project Study. The costs
of preparing the Feasibility or Project Study may be reimbursed by the winning PSP
to the Province/ City/ Municipality under the Competitive Selection mode.

(h) All recommendations of the PPP Selection Committee shall be submitted to the
Provincial Governor/ City Mayor/ Municipal Mayor for consideration and approval.

(i) All PPP contracts must be signed by the Provincial Governor/ City Mayor/
Municipal Mayor with prior authorization by the Sanggunian Panlalawigan/
Panlungsod/ Bayan.

(j) During the consideration of the draft PPP Contract by the Sanggunian
Panlalawigan/ Panlungsod/ Bayan, a public consultation/ hearing shall be conducted
explaining the PPP Project, PPP Contract, accountability mechanisms built into the
PPP arrangement, the benefits and costs of the PPP Project, among other relevant
matters.

(k) After the signing of the PPP Contract by the Provincial Governor/ City Mayor/
Municipal Mayor, the PPP-SC shall issue the Notice of Award to the PSP.

25
(l) While the PPP Contract is already valid, perfected and enforceable, it may be
submitted for judicial, executive or administrative confirmation from the courts or
appropriate government institutions.

Sec. 14. PPP Selection Committee. (a) There is hereby created a PPP Selection
Committee (PPP-SC) for purposes of selecting a PSP for a specific PPP Project. The
PPP-SC, to be constituted and convened by the Provincial Governor/ City Mayor/
Municipal Mayor, shall be composed of the following:

(i) Chairperson At least a third ranking officer of the Province/ City/

Municipality;

(ii) Secretary Provincial/ City/ Municipal Legal Officer;

(iii) The Provincial/ City/ Municipal Treasurer;

(iv) The Provincial/ City/ Municipal Planning and Development Officer;

(v) One (1) representative from and selected by the Sanggunian Panlalawigan/
Panlungsod/ Bayan designated in an appropriate resolution; and

(vi) Two (2) representatives from and chosen by the accredited civil society
groups, peoples and non-governmental organizations who are members of
the Provincial/ City/ Municipal Development Council.

A quorum of the PPP-SC shall be composed of a simple majority of all voting

members. The Chairperson shall vote only in case of a tie.

The PPP-SC with the approval of the Provincial Governor/ City Mayor/ Municipal
Mayor may invite provisional non-voting members from the national government
agencies, regulatory agencies, NEDA, DILG, and the private sector to observe in the
proceedings of the PPP-SC; and form a support staff composed of employees and
staff of the Province/ City/ Municipality.

(b) The PPP-SC shall be responsible for all aspects of the pre-selection and selection
process, including, among others, the preparation of the Feasibility or Project Study
and selection/ tender documents; determination of the minimum designs,
performance standards/ specifications, economic parameters and reasonable rate of
return or tariff-setting mechanism appropriate to the PPP Modality; drafting or
evaluation of the PPP contract; publication of the invitation to apply for eligibility
and submission of proposals or comparative proposals; defining the eligibility

26
requirements, appropriate form and amount of proposal securities, and schedules of
the selection and challenge processes; pre-qualification of prospective PSPs, bidders
or challengers; conduct of pre-selection conferences and issuance of supplemental
notices; interpretation of the rules regarding the selection process; conduct of the
selection or challenge process; evaluation of the legal, financial and technical aspects
of the proposals; resolution of disputes between PSPs and challengers; defining the
appeals mechanisms; and recommendation for the acceptance of the proposal and/
or for the award of the contract.

Sec. 15. Competitive Selection. (a) The Competitive Selection procedure shall
consists of the following steps: advertisement, issuance of instructions and tender
documents, conduct of pre-bid conferences, eligibility screening of prospective
bidders, receipt and opening of bids, posting of proposal securities, evaluation of
bids, post-qualification, and award of contract.

(b) The Provincial Governor/ City Mayor/ Municipal Mayor shall approve the tender
documents and the draft PPP Contract before they are issued to the prospective
PSPs/ bidders.

Sec. 16. Limited Negotiations. Where the Province/ City/ Municipality:

(a) fails to identify an eligible PSP for a desired PPP activity when there is only one
qualified bidder after subjecting the same to a competitive selection or bidding;
or

(b) considers a project or activity either through competitive selection or

competitive challenge where an indispensable or integral component thereof has
already been subjected to a competitive process by the appropriate
administrative agency, government instrumentality or government-owned and -
controlled corporation which gives the PSP/ offerer a vested and exclusive right
over that component without which, the PPP Project cannot be implemented as
envisioned,

Limited Negotiations may take place. The negotiations will cover all the technical
and financial aspects of the PPP project or activity; provided, that the minimum
designs, performance standards/ specifications and economic parameters stated in
the Feasibility or Project Study and Terms of Reference are complied with. The
Provincial Governor/ City Mayor/ Municipal Mayor shall approve the terms of the
Limited Negotiations prior to the award of the contract to the PSP. Under the 2nd
instance, the Province/ City/ Municipality shall publish a notice to the public prior to

27
the start of the negotiations, and if pursued under Competitive Challenge, the 3 rd
stage as defined below may be dispensed with.

Sec. 17. Competitive Negotiations. For concession arrangements, leases or

affermage, and management and service contracts where public funds are not used
to procure the services of the contractor or consultant, the Province/ City/
Municipality invites two or more qualified PSPs to enter into negotiations for a PPP
project, unless there is only one qualified offeror with a unique specialization,
informing all the qualified PSPs that there is more than one offeror and simultaneous
negotiations are being conducted and that the PPP contract shall be awarded to the
PSP which offers the best combination of quality and price based on the feasibility or
project study prepared by the Province/ City/ Municipality. Prior to the start of the
negotiations with the identified PSPs, the Province/ City/ Municipality shall notify the
public of the process.

Sec. 18. Competitive Challenge. The Competitive Challenge process shall be divided
into three (3) Stages, described as:

Stage One/ Unsolicited Proposal The steps are:

(i) A PSP submits an unsolicited proposal accompanied by a Feasibility or Project

Study and draft PPP contract to the Provincial/ City/ Municipal for a projected
PPP Project.

(ii) The PPP-SC shall make a determination of the completeness of the

unsolicited proposal, the eligibility of the PSP, the necessity for the proposed
project, the consistency of the terms of the draft PPP contract with this
Ordinance, and the appropriateness of the proposed PPP modality.

(iii) Upon completion of the initial evaluation, the Provincial Governor/ City
Mayor/ Municipal Mayor, upon recommendation of the PPP-SC, shall either
issue a certificate of acceptance or non-acceptance of the proposal for
purposes of detailed negotiations. Upon the issuance of the certificate of
acceptance, the PSP is ipso facto conferred original proponent status and no
other proposal for the same project may be subjected to the competitive
challenge process.

(iv) If there is more than one unsolicited proposal submitted for the same PPP
Project, the Provincial Governor/ City Mayor/ Municipal Mayor, upon
recommendation of the PPP-SC, may reject all proposals and pursue
competitive selection, or accept the unsolicited proposal that is complete and

28
 provides the greater advantage and benefits to the community and revenues
to the Province/ City/ Municipality.

Stage Two/ Detailed Negotiations The steps are:

(i) The parties shall negotiate and agree on the terms and conditions of the PPP
Project concerning its technical and financial aspects.

(ii) Once negotiations are successful, the Parties shall issue a joint certification
stating that an agreement has been reached and specifying the eligibility of
the PSP and the technical and financial aspects of the PPP Project as agreed
upon.

(iii) The issuance of the certification commences the activities for the solicitation
for comparative proposals.

(iv) However, should negotiations not result to an agreement acceptable to both

parties, the Province/ City/ Municipality shall have the option to reject the
proposal by informing the PSP in writing stating the grounds for rejection and
thereafter may accept a new proposal from other PSPs, decide to pursue the
proposed activity through other PPP Modalities or subject the PPP Project to
a Competitive Selection.

Stage Three/ Competitive or Swiss Challenge Proper The steps are:

(i) The PPP-SC shall prepare the tender documents. The eligibility criteria used in
determining the eligibility of the private sector entity shall be the same as
those stated in the tender documents. Proprietary information shall,
however, be respected and protected, and treated with confidentiality. As
such, it shall not form part of the tender and related documents.

(ii) The Provincial Governor/ City Mayor/ Municipal Mayor shall approve all
tender documents including the draft contract before the publication of the
invitation for comparative proposals.

(iii) The PPP-SC shall publish the invitation for comparative proposals.

(iv) The PSP or Original Proponent shall post the proposal security at the date of
the first day of the publication of the invitation for comparative proposals in
the amount and form stated in the tender documents.

(v) In the evaluation of proposals, the best offer shall be determined to include
the original proposal of the PSP. If the Province/ City/ Municipality

29
 determines that an offer made by a comparative PSP or challenger other than
the negotiated terms with original proponent is superior or more
advantageous to the Province/ City/ Municipality than the original proposal,
the PSP who submitted the original proposal shall be given the right to match
such superior or more advantageous offer. Should no matching offer be
received within the stated period, the PPP Project shall be awarded to the
comparative PSP submitting the most advantageous proposal. If a matching
offer is received within the prescribed period, the PPP Project shall be
awarded to the original proponent. If no comparative proposal is received by
the Province/ City/ Municipality, the PPP Project shall be immediately
awarded to the original proponent.

(vi) In the event that the Original Proponent is not able to match the superior
offer of the challenger, the winning challenger shall reimburse, within 30
days from issuance of the notice of award, the original proponent the cost of
preparing the project study, provided, that this reimbursement arrangement
and the cost of preparing of the project study are expressly stated in the
terms of reference for the competitive challenge, and that the PPP-SC has
determined that the cost is reasonable.

Sec. 19. Schedules and Timelines. The Provincial Governor/ City Mayor/ Municipal
Mayor through an executive order, upon the recommendation of the PPP-SC, shall
have the authority to adopt and prescribe the appropriate schedules and timelines
for each PSP selection process: provided, that the periods are reasonable and will
not undermine free competition, transparency and accountability.

Sec. 20. PPP Contract. (a) The PPP Contract shall be signed by the Provincial
Governor/ City Mayor/ Municipal Mayor on behalf of the Province/ City/
Municipality with the prior authorization or ratification by the Sanggunian
Panlalawigan/ Panlungsod/ Bayan, and the duly authorized representative of the
PSP.

(b) The direct and ultimate beneficiary of any PPP Contract shall be the constituents
of the Province/ City/ Municipality.

(c) The principal PPP Contract shall describe the PPP Project, the rights, functions,
obligations and responsibilities of and risks assumed by each of the contracting
party, dispute mechanisms and all other provisions enumerated under Section 5 (v)
hereof.

30
(d) The other ancillary contracts may include insurance contracts; loan agreements;
bonds; guarantee arrangements; equity arrangements; operations and maintenance
contracts; and engineering, procurement and construction (EPC) contracts.

(e) The Provincial Governor/ City Mayor/ Municipal Mayor shall not proceed with the
award and signing of the contract if there are material deviations from the
parameters and terms and conditions set forth in the proposal/tender documents
that tend to increase the financial exposure, liabilities and risks of the Province/ City/
Municipality or any other factors that would cause disadvantage to government and
any deviation that will cause prejudice to losing PSPs.

(f) Any amendment to a PPP Contract, which if effected will not violate the policy on
competition and fairness and does not materially affect the substance of the PPP
Contract, after award and signing of contract shall undergo approval by the
Provincial Governor/ City Mayor/ Municipal Mayor with prior authorization by the
Sanggunian Panlalawigan/ Panlungsod/ Bayan. Non-compliance with the
corresponding approval process stated shall render the amendment null and void.

Chapter 4. Regulation and Contract Management

Sec. 21. PPP Regulatory Authoritys Mandate. The PPP Regulatory Authority (PPP-
RA) created under this Code shall be tasked with performing contract management
functions, such as partnership management (i.e., corporate governance,
communication and information sharing, and dispute resolution), performance or
service delivery management (i.e., risk management and performance
management), and contract administration (i.e., variation management, contract
maintenance and financial administration), for all PPP arrangements entered into by
the Province/ City/ Municipality. Aside from these, the PPP-RA shall be responsible
for setting and monitoring the tariff, and administering the subsidy pursuant to the
PPP contract.

Sec. 22. Composition of the PPP Regulatory Authority. (a) The membership of the
PPP-RA shall be composed of the following:

(i) Chairperson The Provincial Governor/ City Mayor/ Municipal Mayor

or the Provincial/ City/ Municipal Administrator if so designated by
the Provincial Governor/ City Mayor/ Municipal Mayor;

(ii) Vice-Chairperson Vice-Governor/ Vice-Mayor or a member of the

Sanggunian Panlalawigan/ Panlungsod/ Bayan to be chosen by the
Sanggunian as evidenced by an appropriate resolution;

31
 (iii) Two (2) representatives of the Sanggunian Panlalawigan/ Panlungsod/
Bayan belonging to two (2) distinct registered political parties to
which the Provincial Governor/ City Mayor/ Municipal Mayor does
not belong to chosen on the basis of proportional representation of
all parties represented in the Sanggunian Panlalawigan/ Panlungsod/
Bayan;

(iv) Provincial/ City/ Municipal Legal Officer;

(v) Provincial/ City/ Municipal Treasurer;

(vi) Provincial/ City/ Municipal Planning and Development Officer; and

(vii) Two (2) representatives from and chosen by the accredited civil
society groups, peoples and non-governmental organizations who are
members of the Provincial/ City/ Municipal Development Council.
These representatives shall not be the same representatives in the
PPP-SC.

(b) For projects covered by government-to-government joint PPP undertakings,

the collaborating or partner government entity shall have one (1)
representative in the PPP-RA, provided that such representative shall only sit
in meetings of the PPP-RA, or portions thereof, and have a vote only on
matters directly affecting the PPP project covered by such joint PPP
undertaking. For this purpose, government-to-government joint PPP
undertakings means such mutual agreement entered into by the Province/
City/ Municipality with other local governments, national government
agencies, government-owned and -controlled corporations, government
instrumentalities and government corporate entities, for the implementation
of PPP projects that will benefit the Province/ City/ Municipality and its
community even if the project site is outside the Provinces/ Citys/
Municipalitys territory.

(c) The PPP-RA may appoint a contract manager for a PPP project depending on
the PPP contract value, complexity and associated risks. The contract
manager shall have the necessary management skills and technical
knowledge of the goods, services or works to be provided under the PPP
contract. The PPP-RA shall determine the manner and source of payment for
the contract managers compensation, provided that if a regular employee of
the Province/ City/ Municipality is appointed as contract manager, he/she
shall not receive additional compensation for such appointment. The
contract manager shall have a vote on matters directly affecting the PPP
project that he/she is managing.

32
(d) A quorum of the PPP-RA shall be composed of a simple majority of all voting
members. The Chairperson shall vote only in case of a tie.

(e) The PPP-RA with the approval of the Provincial Governor/ City Mayor/
Municipal Mayor may invite third party experts to attend its meetings to act
as advisors and observers. Such third party experts may represent national
government agencies, regulatory agencies, the NEDA, the PPP Center, the
DILG, private sector, non-governmental organizations and civic groups.

(f) The PPP-RA may form a support staff composed of employees and personnel
of the Province/ City/ Municipality. The PPP-RA may also engage consultants
hired pursuant to law.

Sec. 23. Contract Management Manual. (a) The Provincial/ City/ Municipal Legal
Officer, Provincial/ City/ Municipal Treasurer and Provincial/ City/ Municipal
Planning and Development Officer and one of the civil society representatives of the
PPP-RA, acting as the PPP-RA Manual Committee (PPP-RA-MC), shall jointly prepare
a contract management manual for each executed PPP contract, which shall serve as
a guide to the Province/ City/ Municipality and its personnel in ensuring a consistent,
high quality contract monitoring process that is specific for such PPP contract.

(b) The contract management manual in (a) shall be submitted to the PPP-RA for
approval within twenty-one (21) days from the execution of a PPP contract,
provided that, for outstanding PPP contracts concluded prior to the
effectivity of this Code, the contract management manual shall be submitted
to the PPP-RA within one hundred and twenty days (120) days from the
effectivity of this Code and the provisions of this Code shall apply mutatis
mutandis.

(c) The PPP-RA may accept, reject, or order the revision of the contract
management manual at any time during the life of the PPP project, provided
that any revision subsequent to the first acceptance of the contract
management manual at the inception of the PPP project shall require written
notice to the PSP and opportunity to be heard.

(d) If the contract management manual has not been approved by the PPP-RA
within seven (7) days from its submission as provided in paragraph (b), the
same shall be deemed issued and approved by the PPP-RA for all purposes.

(e) The PPP-RA shall evaluate each contract management manual quarterly,
which shall be amended as may be necessary. Any amendment to the

33
 contract management manual shall be effective upon the approval of the
PPP-RA.

(f) The PPP-RA, all throughout the life of the PPP Contract, shall present, make
available and explain, before and after any material action is taken, all
relevant information regarding the implementation of the PPP Contract, the
submissions of the PSP and actions taken by the PPP-RA, to the Provincial/
City/ Municipal Development Council.

Sec. 24. Contents of the Contract Management Manual. Each contract

management manual shall include the following information:

(a) a description of the PPP project and its history;

(b) a summary of the key terms of the PPP contract;

(c) roles and responsibilities of each member of the PPP-RA and other
Provincial/ City/ Municipal personnel and contractors, as applicable, who are
involved in the PPP project;

(d) roles and responsibilities of key personnel of the PSP;

(e) details of the post-award conference;

(f) partnership management procedures;

(g) performance or service delivery management;

(h) contract administration; and

(i) project closeout procedures.

Sec. 25. Post-Award Conference. (a) Immediately after the PPP contract is awarded,
the PPP-RA Chairperson shall call a post-award conference to ensure that the
Province/ City/ Municipality and PSP have a clear and mutual understanding of the
terms and conditions of the PPP contract, and to determine the responsibilities of
parties. Notice of the post-award conference shall be sent by the PPP-RA
Chairperson at least five (5) working days before the scheduled date thereof.

(b) The post-award conference shall be attended by the members of the PPP-RA,
such employees and contractors of the Province/ City/ Municipality that who

34
 be involved in the management of the PPP contract, and key personnel of the
PSP.

(c) The PPP-RA Chairperson shall preside at the post-award conference, and shall
appoint a secretary of the conference from the Provincial/ City/ Municipal
personnel present.

(d) The minutes of the conference shall be sent to each participant within five (5)
days of the adjournment of the conference.

Sec. 26. Personnel and Training Requirements. (a) The contract management
manual shall identify the Provincial/ City/ Municipal personnel involved in contract
management, the specific roles and responsibilities of each, and the skills and
technical knowledge required to perform their functions.

(b) Independent contractors may be engaged in the absence of the qualified

Provincial/ City/ Municipal personnel, provided that, except in the case of
contract managers engaged in accordance with Section 8(c), contractors may
only be engaged for a period not exceeding three (3) years from the effective
date of the PPP contract. Such contractor shall:

(i) have at least two (2) understudies; and

(ii) provide a training program for Provincial/ City/ Municipal personnel in

his field of specialization, with such training being done regularly
during regular office hours.

(c) During the contract life, the Provincial/ City/ Municipal personnel shall
undergo such continuous training on contract monitoring to ensure that the
Province/ City/ Municipality is equipped to monitor reliably the PSPs
performance over the entire life of the PPP contract.

Sec. 27. Partnership Management. Each contract management manual shall

identify processes to ensure accountability and manage the relationship between
the Province/ City/ Municipality and the PSP, and shall describe:

(a) each partys governance structure, including the overall system of

institutional structures, operating rules, compliance mechanisms and
accountability procedures;

35
(b) guidelines on communication and information sharing between the Province/
City/ Municipality and the PSP, including reporting requirements, frequency
and purpose of regular meetings, record-keeping of all exchanges, and the
acceptable modes of correspondence between them; and

(c) the process for resolving disputes between the parties, identifying, among
others, the different levels of dispute resolution, offices and officials
involved, timetable for resolving such disputes, and possible actions to
compel a party to adequately comply with contractual terms.

Sec. 28. Performance or Service Delivery. The contract management manual shall
identify measures to ensure that the services or goods provided by the PSP are in
accordance with the standards and prices agreed in the PPP contract. Such measure
shall include:

(a) an identification of risks under the PPP contract, the timetable for resolving
such risks when they arise, contingency plans that ensure immediate
resumption of services in the event of an interruption of service delivery by
the PSP, and penalties for failing or refusing to resolve them, provided that a
separate risk mitigation plan shall be developed and periodically reviewed
and updated throughout the life of the contract for contracts with significant
risks;

(b) clear and demonstrable key performance indicators that demonstrate

evidence of poor, satisfactory or non-performance by the PSP, taking into
consideration the cost and value obtained, performance and customer
satisfaction, delivery improvement, delivery capability, benefits realized and
relationship strength and responsiveness;

(c) a performance management plan and performance monitoring system that

will be used by the Province/ City/ Municipality to monitor affordability,
service delivery, value for money, quality, and performance improvement,
which shall in all cases include:

(i) a timetable and start and end date for each performance component,
including milestones with accompanying timeframes, dependencies,
required or desired outcomes, and acceptable performance levels;

(ii) requirements and standards to be used to monitor PSP performance;

(iii) procedures and guidelines for measuring customer satisfaction and

mechanisms to solicit end user feedback;

36
 (iv) submission of regular, accurate and timely reports by the PSP,
Provincial/ City/ Municipal personnel or the contract manager, as
applicable, to the PPP-RA detailing performance monitoring efforts
and the types of information that should be included in such reports;

(v) Province/ City/ Municipality access to PSP records to allow Provincial/

City/ Municipal personnel to verify the information that the PSP
reports to them and to ensure that funds are expended properly;

(vi) random inspections of PSP records and on-site monitoring visits; and

(vii) regular meetings with the PSP to review progress, discuss problems
and consider necessary changes; and

(d) a performance review and corrective actions system that apply to non-
compliance or breach of contract, and penalties for non-performance and
bonuses for good performance.

Sec. 29. Contract Administration. The contract management manual shall lay down
a contract administration system, which shall include:

(a) systems and procedures for variation management, the roles and
responsibilities of Provincial/ City/ Municipal personnel, and reportorial
requirements for each event of proposed or successful contract variation;

(b) a system for contract maintenance, identifying key contract deliverables and
schedules, as well as trigger events; and

(c) systems and procedure for financial administration, including an estimate of

the resources that the Province/ City/ Municipality will devote thereto,
systems and procedures to make and receive financial payments, and rules
for keeping records of financial transactions in accordance with the
requirements of the contract.

Sec. 30. Closeout Procedures. - Formal, written closeout procedures shall be included
in contract management plan to ensure that all goods and services have been
delivered satisfactorily, all properties are disposed accordingly, all Provincial/ City/
Municipal properties are returned, and all amounts due under the PPP contract have
been paid.

37
Sec. 31. Post-Contract Review. - A post-contract review shall be conducted at the end
of a contract period, which shall include a post-contract analysis, evaluation and
reporting of the PPP project, the PSPs performance, and the Provincials/ Citys/
Municipals contract management system. The post-contract review shall likewise
include a financial audit of the entire PPP project and determination of lessons
learned. Provincial/ City/ Municipal policies and procedures shall be updated where
required. Notwithstanding the requirement herein, if the PPP contract is subject to
renewal or extension, the post-contract review shall be conducted within a
reasonable time before the deadline for such renewal or extension.

Sec. 32. Document Control. The PPP-RA shall act as the administrator of documents
and correspondence relating to the PPP project and PPP contract. The contract
management manual shall:

(a) identify the documents and correspondences that must be retained by the
PPP-RA;

(b) require that all such documents be kept in both electronic and paper format
during contract life or such longer period as may be required under
applicable law; and

(c) lay down the protocol for document storage, logging, accountability,
disclosure and access by the parties and the public.

Chapter 5. Accountability, Information, Education and Monitoring

Sec. 33. Code of Conduct. Before commencing their functions, each member of the
PPP-SC and PPP-RA and the contract manager shall sign a Code of Conduct, which
shall guide each member in the performance of their duties as such.

Such Code of Conduct shall require each member to, among others:

(a) act at all times in accordance with relevant legislation and regulations;

(b) act at all times with fidelity, honesty, integrity and in the best interests of the
Province/ City/ Municipality and its constituents;

(c) recognize the publics right to access to information in accordance with law;

(d) not misuse his or her position and privileges of a member of the PPP-SC and
PPP-RA, whether or not such will prejudice the interest of the public, the PSP,
or any third person;

38
(e) to take the utmost care in ensuring reasonable protection of the records of
each PPP project, and to not disclose any confidential and proprietary
information to persons without a need to know such information, or in
violation of any non-disclosure requirements under law or contract;

(f) carry out his or her duties with the skill and care expected from a person of
knowledge and experience, and to exercise prudent judgment;

(g) forthwith report to the appropriate authorities any act of negligence, fraud,
corruption, misuse of government funds, failure or refusal to perform duties,
or any other act which may constitute an crime or offense, or which is
prejudicial to the public interest, in the selection of the PSP and
implementation of a PPP contract;

(h) forthwith declare any personal or business interest that he or she, or any of
his or her relatives within the fourth degree of affinity or consanguinity, may
have in any business of a PSP, in which case, the official or representative
shall no longer be a member of the PPP-SC and PPP-RA;

(i) forthwith declare any conflict of interest, insofar as the PPP Project
concerned, that he or she may have or will have, in which case, the official or
representative shall not longer be a member of the PPP-SC and PPP-RA;

(j) not vote or act in a particular way on any matter in consideration of any
offer, promise, gift or present, from a member of the public, government, a
political party, social group or non-governmental organization, or any
stakeholder or potential stakeholder;

(k) not receive any gift or anything else of value which is or may be viewed as
aimed at influencing or directing his or her vote or actions; and

(l) to disclose immediately to the PPP-SC or PPP-RA as the case may be, any
attempted inducement that may be construed as aimed at influencing or
directing his or her acts as a member of the PPP-SC and PPP-RA.

Sec. 34. Disciplinary Action. Violation of this Code and the Code of Conduct insofar
as the Provincial/ City/ Municipal elective officials are concerned shall constitute a
ground for disciplinary action or amount to loss of confidence under the 1991 LGC
and relevant laws, and with regards local appointive officials, such violation shall
render them administratively liable. Officials may also be rendered criminally liable
under applicable laws and ordinances. Representatives of the PSP shall be held liable

39
for damages, offenses and crimes depending on the nature of their participation and
involvement in the unlawful act or omission.

Sec. 35. Liability. The Province/ City/ Municipality and its officials, in undertaking a
PPP project, selecting a PSP and implementing a PPP contract, shall not be exempt
from liability for death or injury to persons or damage to property.

Sec. 36. Social Accountability. The Province/ City/ Municipality shall ensure,
promote and eliminate all obstacles to social accountability and allow and enhance
constructive engagement between citizens groups, academe, consumers, rate-
payers, general public, Province/ City/ Municipality, national government agencies,
regulatory agencies, and PSP.

Sec. 37. Transparency and Right to Information. The PPP Contract, feasibility or
project studies, bidding documents, terms of reference, results of the PSP selection
process, Code of Conduct, Contract Management Manual, minutes of the post-
award conference, PPP-RA, and PPP-RA-MC, and other relevant documents and
instruments shall be posted in two conspicuous places of the Province/ City/
Municipality and uploaded in a dedicated website of the PPP-RA which can be freely
accessed by the public. The Province/ City/ Municipality shall also implement a
strategic communication plan addressed to all stakeholders.

Sec. 38. Capability-Building Program. (a) The Province/ City/ Municipality shall
design and implement a continuing education and capacity-building program on
PPPs for its officials, and the members of the PPP-SC and PPP-RA.

(b) The Province/ City/ Municipality shall also undertake a comprehensive and
sustained education and governance campaign aimed at informing all stakeholders
and civil society organizations about PPPs ventures of the Province/ City/
Municipality and allowing them to participate in the overall PPP program of the
Province/ City/ Municipality. The program shall include strategic and annual
evaluation and planning sessions, workshops, seminars, focus-group discussions on
PPPs, market opportunities, projects, management of contracts and regulation of
PPPs and other PPP-related topics.

(c) The Province/ City/ Municipality may tap consultants to assist them in
implementing PPPs and in building capability for PPPs.

Sec. 39. Monitoring and Governance Audit Program. The Province/ City/
Municipality, in order to ensure transparency and accountability, shall encourage
civil society organizations, peoples and non-governmental organization and civic
aggrupations to establish a PPP monitoring, evaluation and governance audit body

40
functionally and fiscally independent from the Province/ City/ Municipality and other
government institutions.

Sec. 40. Technical and Financial Assistance. The DILG, Department of Finance,
Department of Budget and Management, NEDA and the PPP Center may extend
technical and financial assistance to the Province/ City/ Municipality and such
assistance may be embodied in a memorandum of understanding or agreement.

Chapter 6. Final Provisions

Sec. 41. Appropriations. To carry out the provisions of this Code, the amount of
(amount) Pesos (P [figures]) shall be appropriated. Thereafter, such sums as may be
necessary for the continuous implementation of this Code shall be included in the
annual budget of the Province/ City/ Municipality.

Sec. 42. Alternative Dispute Resolution. All PPP contracts of the Province/ City/
Municipality shall include a provision on the use of Alternative Dispute Resolution
(ADR) mechanisms in resolving disputes arising from the PPP contract. All
controversies in connection with PPP undertakings and projects of the Province/
City/ Municipality shall likewise be addressed using ADR.

Sec. 43. Implementing Rules. While this Code and the provisions hereof are already
operative upon the Codes effectivity, the Provincial Governor/ City Mayor/
Municipal Mayor may issue the appropriate and relevant rules and regulation for the
proper implementation of the Code or its provisions, including the issuance of
relevant mechanisms to insure competition, manuals, guidelines, sample contracts
and bid documents, PPP indexes and comparators, and performance scorecards.

Sec. 44. Application of Other PPP Laws and Regulations. Whenever relevant and
appropriate as determined by the Provincial Governor/ City Mayor/ Municipal Mayor
and in the absence of a specific provision to the contrary, upon recommendation of
the PPP-SC and PPP-RA as the case may be, the BOT Law, the GPRA, Executive Order
No. 301 (26 July 1987), COA Circular No. 89-296 (January 27, 1989), and their
applicable rules and regulations, and the JV Guidelines adopted by the NEDA, either
the 2008 or 2013 versions, shall apply in a suppletory manner.

Sec. 45. Separability Clause. If, for any reason, any section or provision of this Code
or any part thereof, or the application of such section, provision or portion is
declared invalid or unconstitutional, the remainder thereof shall not be affected by
such declaration.

41
Sec. 46. Repealing Clause. All ordinances and resolutions or parts thereof
inconsistent with the provisions of this Code are hereby repealed or modified
accordingly.

Sec. 47. Effectivity. This Code shall take effect fifteen (15) days after its posting in
two conspicuous places within the Province/ City/ Municipality.

42
 B. PROPOSED LGU JOINT VENTURE ORDINANCE
November 23, 2014

Ordinance No. ____

Series of 20___

A PROVINCIAL/ CITY/ MUNICIPAL ORDINANCE PURSUING A JOINT VENTURE (JV)

APPROACH TOWARDS DEVELOPMENT, PROVIDING FOR THE PROCEDURE FOR
SELECTING THE JV PRIVATE SECTOR PARTNER AND REGULATION OF THE JV
ACTIVITY, AND INSTITUTING ACCOUNTABILITY MECHANISMS

WHEREAS, under Section 20, Article II of the 1987 Constitution, the State recognizes
the indispensable role of the private sector, encourages private enterprise, and
provides incentives to needed investments;

WHEREAS, the private sector participates in infrastructure, development and social

service-related projects of the State and local government units (LGUs) through what
is popularly known as Public-Private Partnerships (PPPs);

WHEREAS, Republic Act No. 7160 or the Local Government Code of 1991 (1991 LGC),
in particular Sections 17 (a), 18 and 22, empower LGUs to discharge functions and
responsibilities as are necessary, appropriate, or incidental to efficient and effective
provisions of the basic services and facilities, to acquire, develop, lease, encumber,
alienate, or otherwise dispose of real or personal property held by them in their
proprietary capacity and to apply their resources and assets for productive,
developmental, or welfare purposes, in the exercise or furtherance of their
governmental or proprietary powers and functions and thereby ensure their
development into self-reliant communities and active participants in the attainment
of national goals, to enter into contracts and to enjoy full autonomy in the exercise
of their proprietary functions, respectively;

WHEREAS, 1991 LGC and its Implementing Rules and Regulations (IRR) categorically
empower LGUs to enter into JVs, a PPP modality, to wit:

Section 35. Linkages with People's and Non-governmental Organizations.

Local government units may enter into joint ventures and such other
cooperative arrangements with people's and non-governmental
organizations to engage in the delivery of certain basic services,
capability-building and livelihood projects, and to develop local
enterprises designed to improve productivity and income, diversity
agriculture, spur rural industrialization, promote ecological balance, and
enhance the economic and social well-being of the people.

43
 Article 66. Joint Ventures and Cooperative Programs or Undertakings.
LGUs may enter into joint ventures and such other cooperative
arrangements with people's organizations, NGOs or the private sector, to
engage in the delivery of certain basic services; capability-building and
livelihood projects; develop local enterprises designed to improve
productivity and income; diversify agriculture; spur rural industrialization;
promote ecological balance; and enhance the economic and social well-
being of the people.

WHEREAS, the 1991 LGC and its IRR, however, do not define what a JV is and do not
spell out the particular requirements and conditions, and procedures for choosing
the private JV partner. The absence of a detailed statute and national framework on
LGU JVs and the authority of LGUs to adopt or enact their own LGU JV framework or
ordinance have been confirmed by the Department of Interior and Local
Government or DILG (Legal Opinion No. 10, s. 2014, April 8, 2014; Legal Opinion No.
47 s. 2012, July 13, 2012) and the Department of Justice (Opinion No. 18, S. 2012,
April 3, 2012). Presidential Executive Order No. 78 (July 4, 2012) also affirmed that
LGUs may provide their own JV rules, guidelines and procedures;

WHEREAS, a JV is not a variant under R.A. 6957 as amended by R.A. 7718, popularly
known as the BOT Law, and is not procurement as defined under the R.A. 9184 or
the Government Procurement Reform Act (GPRA), therefore, said statutes do not
govern JVs;

WHEREAS, the JVs by LGUs are excluded from the coverage of the 2013/ Revised and
2008 JV Guidelines issued by the National Economic and Development Authority
(NEDA) are adopted herein;

WHEREAS, in furtherance of and consistent with local autonomy, fiscal autonomy,

the principle of subsidiarity, public good and welfare, general welfare, and full
autonomy over proprietary powers, LGUs are free, provided no statute is violated, to
adopt their own definition of a JV undertaking and prescribe the requirements,
procedures and conditions for local JVs, and incorporate these in an operative
framework; and

WHEREAS, having a framework in ordinance form will ensure and facilitate

consistency, integrity, reliability, sustainability, accountability and transparency, and
enforceability;

44
NOW THEREFORE, on motion of Councilor (name), duly seconded by Councilor(s)
(name[s]),

BE IT ORDAINED, by the Sangguniang Panlalawigan/ Panlungsod/ Bayan of (name)

in session assembled that:

SECTION 1. Title. This Ordinance shall be known as A PROVINCIAL/ CITY/

MUNICIPAL ORDINANCE PURSUING A JOINT VENTURE (JV) APPROACH TOWARDS
DEVELOPMENT, PROVIDING FOR THE PROCEDURE FOR SELECTING THE JV PRIVATE
SECTOR PARTNER AND REGULATION OF THE JV ACTIVITY, AND INSTITUTING
ACCOUNTABILITY MECHANISMS and cited as the (Name of LGU) JV Ordinance.

Sec. 2. Declaration of Policy. (a) It is hereby declared, as a policy, that the Province/
City/ Municipality of (name) shall advance the public good and general welfare, and
promote the interest of the community and the Province/ City/ Municipality within
the framework of sustainable and integrated development, and effective
constructive engagement and meaningful peoples participation in local governance.

(b) PPPs in general and JVs in particular shall be pursued by the Province/ City/
Municipality consistent with and in furtherance of the vision and mission of the City
which state that:

VISION: (state vision)

MISSION: (state mission)

Sec. 3. Operative Principles. The accomplishment of the stated policy shall be

guided by the following principles:

(p) The Province/ City/ Municipality, pursuant to Sections 1, 2 and 5, Article X of the
1987 Constitution, is a territorial and political subdivision which enjoys local
autonomy and fiscal autonomy. Under Section 3, Article X of the 1987
Constitution, local autonomy means a more responsive and accountable local
government structure instituted through a system of decentralization. Fiscal
autonomy means that local governments have the power to create their own
sources of revenue in addition to their equitable share in the national taxes
released by the national government, as well as the power to allocate their
resources in accordance with their own priorities.

(q) The general welfare and the public good shall always be promoted and that
transparency, public accountability and social accountability mechanisms and
approaches shall be integrated in JVs from inception to implementation.

45
(r) The Province/ City/ Municipality exists and operates in its governmental and
proprietary capacities thereby making the Province/ City/ Municipality an agent
of and is therefore accountable to the State and its community.

(s) The Province/ City/ Municipality must develop into a self-reliant community, and
as such, is in a better position to address and resolve matters that are local in
scope.

(t) Under Section 18 of the of Republic Act No. 7160 of the Local Government Code
of 1991 (1991 LGC), the Province/ City/ Municipality may acquire, develop, lease,
encumber, alienate, or otherwise dispose of real or personal property held by
them in their proprietary capacity and to apply their resources and assets for
productive, developmental, or welfare purposes.

(u) Under Section 22 (c) of the 1991 LGC, no contract may be entered into by the
Provincial Governor/ City Mayor/ Municipal Mayor on behalf of the Province/
City/ Municipality without prior authorization from the Sanggunian
Panlalawigan/ Panlungsod/ Bayan. The participation of the Sanggunian is thus
indispensable in the adoption and implementation of a JV arrangement.

(v) Under Section 22 (d) of the 1991 LGC, the Province/ City/ Municipality enjoys full
autonomy in the exercise of its proprietary functions and shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, those not otherwise prohibited by law and those which are essential
to the promotion of the general welfare.

(w) Under Section 25 (b) of the 1991 LGC, the Province/ City/ Municipality may
collaborate or cooperate with other LGUs, national government agencies (NGAs),
government-owned and controlled corporations (GOCCs), government
instrumentalities (GIs) and government corporate entities (GCEs) for the
implementation of local JV projects.

(x) Under the charter of the Province/ City/ Municipality, Sections 16, 17, 19 and
129 of 1991 LGC and other statutes, the Province/ City/ Municipality has been
given the responsibility and mandate to exercise devolved and delegated
powers.

(y) The Province/ City/ Municipality, under Section 106 of 1991 LGC, is mandated to
draw up and implement a comprehensive multi-sectoral development plan. JVs
shall be pursued by the Province/ City/ Municipality consistent with its

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 infrastructure, development, investment, environmental and governance
framework embodied in relevant policies, plans, ordinances and codes.

(z) The Province/ City/ Municipality, as a partner in a JV arrangement, may provide

money, capital, land, assets, intellectual property, personnel, services, franchise,
equity, subsidy or guarantee and use local funds; and the usage thereof for a JV
project shall be considered for public use and purpose.

(aa) The Province/ City/ Municipality, under Section 3 (l) of the 1991 LGC, is duty-
bound to ensure the active participation of the private sector in local
governance. In the selection of the private sector proponent (PSP), the three
core requirements competition, transparency and accountability must be
complied with.

(bb) The right of the people to information on matters of public concern is

guaranteed under Section 7, Article III of the 1987 Constitution. Furthermore, it
is the policy of the State to allow full public disclosure of all its transactions
involving public interest such as JV agreements (JVAs) under Section 28, Article II
of the 1987 Constitution.

(cc) The peoples right to effective and reasonable participation and public trust
provision under Section 16, Article XIII and Section 1, Article XI, respectively, of
the 1987 Constitution guarantee and empower civil society groups to have
effective and meaningful participation in the regulation and management of JV
projects.

Sec. 4. Rationale for JVs. In pursuing JVs, the Province/ City/ Municipality shall be
guided by the following reasons and drivers:

(a) JVs shall be promoted to provide more, better, affordable and timely services to
the community. JVs shall be undertaken in furtherance of the Provinces/ Citys/
Municipalitys vision, mission and development and physical framework plan.

(b) JVs shall promote the pooling and community of resources, sharing of
responsibilities and functions, joint governance and decision-making, mutual
innovation, and profit, income, dividends, risk and loss allocation.

(n) JVs shall encourage the accelerated implementation of local projects, allow for
technology transfer, and improved efficiency and quality of service, provide
value-for-money and good economic value, enhance economic and social
benefits.

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(o) Procurement of JV Projects must be competitive and must be undertaken
through open competitive bidding or competitive challenge, or in certain cases,
limited negotiations. Competition must be legitimate, fair and honest. The
selection of the private sector co-venturer must be done in compliance with the
requirements of competition, transparency and accountability.

Sec. 5. Rules of Interpretation. This Ordinance and the provisions hereof shall be
liberally interpreted to accomplish the policy and objectives herein set forth.

Sec. 6. Definition of Terms. As used in this Ordinance, the following terms shall
mean:

(gg) Competitive Challenge or Swiss Challenge - An alternative selection process

wherein third parties or challengers shall be invited to submit comparative
proposals to an unsolicited proposal. Accordingly, the PSP that submitted the
unsolicited proposal, or the original proponent, is accorded the right to match
any superior offers given by a comparative PSP/ challenger.

(hh) Competitive Selection or Bidding or Open Competition - A method of selection

or procurement initiated and solicited by the Province/ City/ Municipality, based
on a transparent criteria, which is open to participation by any interested party.

(ii) Contractual JV - A legal and binding agreement under which the JV Partners shall
perform the primary functions and obligations under the JVA without forming a
JV Company.

(jj) Cost of JV Activity/Project - The total amount of the contributions of the parties
to the JV activity/project in present value with discount rate.

(kk) Cost Sharing - The capital expenses made by the Province/ City/ Municipality
associated with the establishment of an infrastructure development facility such
as the provision of access infrastructure, right-of-way, and any partial financing
of the project.

(ll) Credit Enhancement - The direct and indirect support to a development facility
by the PSP and/or Province/ City/ Municipality, the provision of which is
contingent upon the occurrence of certain events and/or risks, as stipulated in
the JVA. Credit enhancements are allocated to the party that is best able to
manage and assume the consequences of the risk involved. Credit enhancements
may include but are not limited to government guarantees on the performance
or the obligation of the Province/ City/ Municipality under its contract with the
PSP, subject to existing laws on indirect guarantees. Indirect Guarantees shall

48
 refer to an agreement whereby the Province/ City/ Municipality assumes full or
partial responsibility for or assists in maintaining the financial standing of the PSP
or project company in order that the PSP/ project company avoids defaulting on
the project loans, subject to fulfillment of the PSP/ project company of its
undertakings and obligations under the JVA.

(mm) Developmental Projects Provincial/ City/ Municipal Projects normally

financed and operated by the Province/ City/ Municipality, but which will now be
wholly or partly financed, constructed and/ or operated by the PSP; projects that
will advance and promote the general welfare and public good; projects and
activities that will be responsive to the needs of the communities; projects that
will raise revenues for the Province/ City/ Municipality; projects in furtherance of
devolution, deconcentration and decentralization; and other infrastructure,
social-related and developmental projects as may be authorized by the Province/
City/ Municipality.

(nn) Direct Provincial/ City/ Municipal Equity - The subscription by the Province/
City/ Municipality of shares of stock or other securities convertible to shares of
stock of the JV Company whether such subscription will be paid by money or
assets.

(oo) Direct Provincial/ City/ Municipal Guarantee - An agreement whereby the

Province/ City/ Municipality guarantees to assume responsibility for the
repayment of debt directly incurred by the PSP in implementing the project in
case of a loan default.

(pp) Direct Provincial/ City/ Municipal Subsidy - An agreement whereby the

Province/ City/ Municipality shall: (a) defray, pay or shoulder a portion of the JV
project cost or the expenses and costs in operating and maintaining the project;
(b) condone or postpone any payments due from the PSP; (c) contribute any
property or assets to the project; (d) waive or grant special rates on real property
taxes on the project during the term of the contractual arrangement; and/ or (e)
waive charges or fees relative to the business permits or licenses that are to be
obtained for the construction of the project, all without receiving payment or
value from the PSP or operator for such payment, contribution or support.

(qq) Divestment or Disposition - The manner or scheme of taking away, depriving,

withdrawing of title to a property owned by the Province/ City/ Municipality and
vesting ownership thereof to a PSP.

(rr) Project Study - A study prepared by the Province/ City/ Municipality in a

competitive selection or a PSP when submitting an unsolicited proposal, which
indicates the following: needs analysis, affordability assessment, value for money

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 assessment, preliminary risk assessment, stakeholder assessment, human
resource assessment, bankability assessment, legal viability assessment, market
testing if relevant, indicative transaction implementation plan, and draft JVA. The
Project Study may be a feasibility study, pre-feasibility study or business case.

(ss) JV Company A stock corporation, formed by the Province/ City/ Municipality

and the PSP, fifty percent (50%) or less of the outstanding capital stock of which
is owned by the Province/ City/ Municipality.

(tt) JV Partner or Private Sector Proponent (PSP) - The private sector entity which
shall be the JV partner of the Province/ City/ Municipality for the JV project or
activity and which shall have an adequate track record in the concerned industry,
as well as technical capability and financial base consisting of equity and firm
commitments from reputable financial institutions, to provide, upon award,
sufficient credit lines to cover the total estimated cost of the project to
implement the said project. The JV Partner or PSP may be a consortium or
private JV.

(uu) Negotiated Projects - The instances where the desired project is the result of
an unsolicited proposal from a PSP or, where the Province/ City/ Municipality has
failed to identify an eligible private sector partner for a desired JV activity when
there is only one qualified bidder after subjecting the same to a competitive
selection or bidding.

(vv) Public-Private Partnerships (PPP) - PPP is a form of legally enforceable

contract between the Province/ City/ Municipality and a PSP, where each party
assumes specified functions, bears certain risks, provides contribution or renders
some obligation, and earns benefits and revenues from the PPP arrangement.

(ww) Unsolicited Proposal - Refers to project proposals submitted by a PSP to the

Province/ City/ Municipality to undertake a JV Project without a formal
solicitation issued by the Province/ City/ Municipality whereby the negotiated
terms shall be subjected to comparative proposals.

Sec. 7. JV Arrangement. (a) A JV, a PPP modality, is a contractual arrangement

between the Province/ City/ Municipality and a JV PSP or a group of private sector
entities as co-venturers involving a community or pooling of interests in the
performance of the service, function, business, activity or components of the JV
project, with each party having a right to direct and govern the policy in connection
therewith, and with a view of sharing income, dividends, revenues, profits, risks and
losses, subject to the JVA.

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(b) The term of the JV activity should be a fixed period not to exceed a maximum of
fifty (50) years.

(c) The JV activity may, subject to the terms of the competitive selection process,
include the divestment, disposition or transfer of ownership of the JV activity, asset
or project to the PSP or JV partner. The divestment or disposition may take place at
the end of the JV period or before the term ends.

(d) The Province/ City/ Municipality, by mutual agreement in a Government-to-

Government arrangement with other LGUs, NGAs, GOCCs, GIs and GCEs, may
implement JV Projects for projects located within the Provinces/ Citys/
Municipalitys territory or those projects that will benefit the Province/ City/
Municipality and its community even if the project site is outside the Provinces/
Citys/ Municipalitys territory; provided, that the collaborating or partner
government entity jointly undertakes with the Province/ City/ Municipality the
selection of the PSP.

Sec. 8. Contributions and Shareholdings. (a) The co-venturers or parties to a JV shall

contribute money, capital, services, personnel, assets including equipment, land,
intellectual property or anything of value, or a combination of any or all of the
foregoing to the JV arrangement. The contribution of the Province/ City/
Municipality shall be subject to third party independent valuation.

(b) The Province/ City/ Municipality may allocate a portion of its Internal Revenue
Allotment, real property tax, development fund, regular funds, proceeds from the
utilization and development of its national wealth, Special Education Fund when the
JV project is education-related, Calamity Fund when the JV project is calamity- or
reconstruction-related, and special funds, if appropriate, as its contribution or share
in the JV activity. These may be the actual or current funds, or future or monetized
value of these funds of the Province/ City/ Municipality.

(c) The Province/ City/ Municipality may contract a loan, avail of Official
Development Assistance, secure grants, issue bonds, debentures, securities,
collaterals, and notes the proceeds of which can be earmarked for the JV activity.

(d) On the part of the Province/ City/ Municipality, in addition to the foregoing
contributions, it may extend goodwill, free carry, grant a franchise, concession,
usufruct, right-of-way, equity, subsidy or guarantee, provide cost-sharing and credit
enhancement mechanisms, exercise police power, give tax incentives or tax holidays,
perform devolved powers, expropriate and reclassify and enact or integrate zoning
ordinances.

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(e) The Province/ City/ Municipality shall be a minority equity or shareholder while
the PSP shall be majority equity or shareholder, except in the case where fifty
percent (50%) of the outstanding capital stock or contribution is owned or made by
the Province/ City/ Municipality. A reasonable percentage of the equity to be
provided by the PSP should come from its own resources and not borrowed.

(f) Notwithstanding having only a minority share or equity, the written consent of
the Province/ City/ Municipality may be obtained, based on the JVA, prior to any
divestment of any asset or facility, dissolution, transfer or sale of share or equity on
the part of the PSP, purchases or transactions beyond prescribed thresholds, or
other activities which may affect the rights and stake in the Project of the Province/
City/ Municipality.

(g) Any cost avoidance or substantial savings that will be made by the Province/ City/
Municipality because of and directly attributable to the JV activity may be factored in
the computation of the respective shares of the Province/ City/ Municipality and the
PSP.

(h) For the utilization and development of natural resources located within its
jurisdiction, the Province/ City/ Municipality shall be entitled to an equitable share
which may come in the form of a portion of the benefits, revenues and profits
thereof.

(i) The share of each JV party shall be set as fixed or determinable percentages or
values either based on an overall or across-the-board assignment of contributions,
revenues, profits, losses, risks and functions; or on specific assignment of
contributions and functions to each JV party, provided that, the agreed percentage
share is maintained and that joint governance is ensured where the Province/ City/
Municipality shall have representation in the governing structure based on in
proportionate share at the minimum.

(j) Subject to the terms of the competitive selection process and agreement of the
parties, the Province/ City/ Municipality may be entitled to a share greater than its
contribution or equity.

(k) Each party shall be entitled to dividends, profits, income and revenues and will
bear the corresponding risks, losses and obligations in proportion to its share, either
based on gross or net revenues or income, unless the parties agree that the
Province/ City/ Municipality will have a greater share in the dividends, profits,
income and revenues and/ or bear lower risk and percentage loss than what it
contributes to the JV arrangement.

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(l) For as long as the Province/ City/ Municipality is involved in the JV undertaking,
the PSP shall not sell/transfer its interest in the JV Company without the express
written consent of the Province/ City/ Municipality.

(m) The share or equity of the Province/ City/ Municipality in the JV arrangement
may be advanced, in full or in part, by the PSP where the PSP shall be paid from the
future revenues due the Province/ City/ Municipality either by set-off or actual
payment.

(n) Any subsidy, guarantee, equity or contingent liability assumed or given by the
Province/ City/ Municipality must be reflected, disclosed and recognized in the
annual appropriations of the Province/ City/ Municipality.

Sec. 9. JV Agreement. (a) The JVA shall govern the relationship between the co-
venturers, the Province/ City/ Municipality and PSP. The JVA shall be a public
document which can be freely accessed by the public, shall be posted in two
conspicuous places of the Province/ City/ Municipality and uploaded in the website
of the Province/ City/ Municipality.

(b) The JVA shall contain the following provisions:

1. The date on which the agreement is established, executed, and

considered effective;
2. The names, addresses and identification of the parties, including the type
of business of each member of the JV;
3. The name under which the JV will do business;
4. The principal place of business of the JV;
5. Clearly defined purpose and objective/s, contractual/agreement mode
(whether JV Company/Corporate JV or contractual JV), term and scope of
the JV;
6. The term of the JV activity;
7. Total cost of the JV activity, project specifications and features;
8. The relationship between the parties, management roles of each party in
the JV activity, and a statement that the parties are actually co-venturers
for the project, whether or not the contract is in the name of all
members;
9. The establishment of a fund by the parties to finance the work, together
with the amount, type (cash, assets, etc.), and valuation of committed
contributions of each party and when such contributions will be made,
with the fund being deposited in a special bank account under dual
control and all progress payments and other revenues being deposited in
such account. If the equity/contribution of the private sector is to be

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 borrowed, a statement that a provincial/ city/ municipal government
guarantee for said loan will be extended or not;
10. Procedure for additional capital infusions, if required, and a statement
that a provincial/ city/ municipal government guarantee for loans to be
incurred by the private sector in case the additional contribution of the
private sector is to be borrowed will be extended or not;
11. A declaration of the participation of the parties and percentage in which
profits and losses are shared, in proportion to the contributions of the
party to the working fund. The amount of contribution of funds by the
parties can be increased or decreased, depending on the contributions of
equipment or expertise;
12. The formation of a governing board or equivalent structure in the case of
a Contractual JV and a board of directors in case of a Company JV;
13. Specified termination/liquidation of the JV Company, buy-out provisions,
and details on the transfer of ownership of the JV activity/facility
including provisions on what happens to the JVs assets after the
expiration of the JV agreement or end of the JV period. If equity other
than cash is to be contributed, a statement as to how the property will
be valuated and the ownership of the property during and after the
effectivity of the JVA;
14. Designation of one of the parties as general manager of the project, with
authority to bind the JV Company/Partnership/Parties; or, in the
alternative, the constitution of a management committee, with a
provision for remuneration. The basic management structure,
management duties, other duties of the co-venturers and procedures to
be followed in dealing with unusual situations or problems that may
develop should be specified;
15. Implementation milestones, regular meeting schedules, financial and
periodic JV and progress reporting procedure;
16. Establishment of a JV bank account, and the appointment of a chartered
accountant and lawyer;
17. Provide for the acquisition of licenses in the name of the JV or each co-
venturer, as required;
18. Type of insurance carried by the JV and clearly defined liabilities to be
insured against by each participant;
19. Definition of items which are to be considered as costs to the JV for the
purpose of determining profit or loss and a description of items which
are not reimbursable to members of the JV and specified division of the
profits and, risks and losses;
20. Confidentiality of trade information passed between the co-venturers;
21. Ownership or retention of patents, technology, and consultant reports;
22. Performance security requirements of the project and the bonding
obligations of the co-venturers;

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 23. Undivided pro-rata interests held by the co-venturers on all assets of the
JV;
24. Restriction regarding assignment of private sector participants undivided
pro-rata interests in assets of the JV;
25. Cost recovery scheme, including payment to the government of
royalties/rights, the form/description and amount of earnings (cash,
asset, etc.), whether it is in absolute amounts or variable, and the period
and timing such earnings or payment shall be received. In case of non-
cash payment or payment in form of asset, a statement/provision on
how it will be valuated, the minimum value of the asset, and the
determination/selection of asset such as how and who will
determine/select the asset;
26. Indemnification and liquidated damages;
27. Performance and warranty bonds;
28. Minimum insurance coverage;
29. Acceptance tests and procedures;
30. Validity of the performance security, warranty period and procedures;
31. Grounds for and effects of contract termination/default including modes
for settling disputes, procedure for handling guarantees, defects and
insurance after termination, and threshold (in terms of amount,
time/period, or both) for which non- payment or delay in payment and
delay in starting the project/s shall be grounds for termination/rescission
of the JV contract/agreement;
32. The manner and procedures for the resolution of warranty against
corruption;
33. Compliance with all other laws, rules and regulations;
34. Procedure and/or period for withdrawal by the government entity of its
contribution to the JV, or exit divestment by the Government Entity of its
interest in the JV, and Substitution or addition of parties;
35. Payout of funds;
36. Alternative Dispute Resolution;
37. Disputes arbitration clause; and
38. Anti-Corruption warranties.

(b) All JVAs must be signed by the Provincial Governor/ City Mayor/ Municipal Mayor
with prior authorization by the Sanggunian Panlalawigan/ Panlungsod/ Bayan, and
the duly authorized representative of the PSP. The direct and ultimate beneficiary of
any JVA shall be the constituents of the Province/ City/ Municipality.

(c) The Provincial Governor/ City Mayor/ Municipal Mayor shall not proceed with the
award and signing of the contract if there are material deviations from the
parameters and terms and conditions set forth in the proposal/tender documents

55
that tend to increase the financial exposure, liabilities and risks of the Province/ City/
Municipality or any other factors that would cause disadvantage to government and
any deviation that will cause prejudice to losing PSPs.

(d) Any amendment to a JVA, which if effected will not violate the policy on
competition and fairness and does not materially affect the substance of the JVA,
after award and signing of contract shall undergo approval by the Provincial
Governor/ City Mayor/ Municipal Mayor with prior authorization by the Sanggunian
Panlalawigan/ Panlungsod/ Bayan. Non-compliance with the corresponding approval
process stated shall render the amendment null and void.

(e) The regulation of the JV shall be pursuant to the JVA. A duly executed JVA shall be
respected and not impaired, and shall be binding on the successor administration
pursuant to the provision on corporate succession. Procedures, activities and steps
duly undertaken by the Provincial Governor/ City Mayor/ Municipal Mayor, PPP-SC,
and Sangguniang Panlalawigan/ Panlungsod/ Bayan pursuant to this Ordinance shall
be continued by the successor Administration. Any amendment or revision to this
Ordinance by the next Administration shall not in any way prejudice vested and
contractual rights of the Province/ City/ Municipality and the PSPs as to the
substance of agreements signed, certifications issued, resolutions issued and
procedures undertaken.

(f) While the JVA is already valid, perfected and enforceable, the JVA may be
submitted for judicial, executive or administrative confirmation from the courts or
appropriate government institutions.

(g) A JVA with a PSP pertains to the JV activity or project identified in the JVA.

Sec. 10. JV Projects. (a) The Province/ City/ Municipality, regardless of the cost,
may undertake developmental projects.

(b) JVs may be undertaken for the delivery of certain basic services, capability-
building and livelihood projects, to develop local enterprises designed to improve
productivity and income, diversity agriculture, spur rural industrialization, promote
ecological balance, and enhance the economic and social well-being of the people.

(c) In particular, the Province/ City/ Municipality may enter into JV arrangements for
developmental projects such as but not limited to energy and power, renewable
energy, waste-to-energy, roads, bridges, causeways, waterways, highways, ports,
wharfs, terminals, airports, community airports, canals, dams, desilting, dredging,
mining and exploration, hydropower projects, water supply and distribution,
sewerage, irrigation, drainage, water conservation such as impoundment areas and

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rainwater harvesting, telecommunications, railroad and railways, short-haul transit
services such as monorail, guided bus, bus services and trams, intermodal and multi-
modal transit systems, transport systems, traffic control and management, parking
facilities, reclamation projects, platform settlements, industrial estates or townships,
central business and industrial park development, hotels and resorts, socialized
housing, non-conventional low-cost housing, settlement/ resettlement and
relocation facilities, residential subdivisions, parks and open space development/
redevelopment, pocket parks, public art, libraries, heritage conservation,
government buildings, sustainable/ green public buildings, sports facilities, wellness
establishments, tourism such eco-tourism, wellness tourism and agri/agro-tourism,
public markets, commercial buildings, slaughterhouses, storage buildings,
warehouses, cold storage, solid waste management, sanitary landfills, meeting and
convention centers, information technology networks and database infrastructure,
education-related, classrooms, health facilities, hospitals, social services-related,
prisons, agriculture-related, post-harvest facilities, environmental management and
protection, climate change adaption, disaster risk reduction, among other
developmental projects.

(d) The Province/ City/ Municipality shall identify specific priority developmental
projects enumerated in its comprehensive multi-sectoral development plan, and
development and physical framework plan for JV arrangements.

(e) Parties to a JV jointly undertake an activity in order to accomplish either an

integrated or multi-use arrangement or specific goal or purpose with the end view of
serving the public good, facilitating private sector initiative in a particular industry or
sector, and eventually transferring ownership of the investment activity to the PSP
under competitive market conditions.

(f) In case of a project or activity requiring a franchise, concession or license to

operate, the winning PSP, in case of a contractual JV, shall automatically be granted
by the Province/ City/ Municipality the franchise or license or permit to jointly
operate and maintain the facility with the Province/ City/ Municipality, including the
collection of tolls, fees, rentals, and other charges in accordance with the schedules
stipulated in the approved JVA. In case a JV Company is formed, the franchise,
concession or license shall be automatically granted to the JV Company. Upon the
signing of the JVA by the Governor/ Mayor pursuant to the authority given by the
Sangguniang Panlalawigan/ Panlungsod/ Bayan, the franchise, concession or license
is deemed awarded to the winning PSP, in case of a contractual JV, or the JV
company. The original franchise period as stipulated in the JVA may be extended, as
may be authorized by the Province/ City/ Municipality, provided that the total
franchise period shall not exceed fifty (50) years.

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(g) Procurement made by the Province/ City/ Municipality using public funds shall be
subject to the GPRA and its Revised Implementing Rules and Regulations.
Procurement made by the PSP using private funds shall not be covered by said
statute.

(h) The revenues, funds, expenditures and contributions of the Province/ City/
Municipality shall be subject to the audit examination by the Commission on Audit
(COA). Revenues, funds, expenditures and contributions of the PSP shall be subject
to audit by a private auditing firm.

[Alternatively, the revenues, funds, expenditures and contributions from the

Province/ City/ Municipality and from the PSP are subject to audit by the COA.]

Sec. 11. JV Vehicle. (a) The Province/ City/ Municipality and the PSP have the
option to implement the JV activity through a Contractual or Unincorporated JV, or
establish a JV or Incorporated Company.

(b) The JV Company shall be formed by the Province/ City/ Municipality and the PSP
under the following parameters:

1. The JV Company shall be incorporated and registered as a stock corporation

in accordance with the provisions of Batas Pambansa Bilang 68, otherwise
known as the Corporation Code of the Philippines, as amended, and the
prevailing and applicable rules and regulations promulgated by the Securities
and Exchange Commission;
2. Ownership and nationality requirements under the Constitution and other
pertinent laws should be complied with;
3. The Province/ City/ Municipality shall be represented in the Board of the JV
Company in proportion to its investment unless more seats are allotted for
the Province/ City/ Municipality;
4. The JV Company shall be permitted to derive income from the activities
authorized under the JVA during the term thereof. The Province/ City/
Municipality and the PSP shall be entitled to receive dividends each year from
the net profits that would constitute portion of the unrestricted retained
earnings of the company in each year in accordance with the JVA; and
5. The JV Company should stipulate a fixed period for term of existence not to
exceed a maximum of fifty (50) years.

Sec. 12. JV Procedural Requirements. (a) If the Province/ City/ Municipality opts to
select a PSP using either Competitive Selection or Competitive Challenge, the
Province/ City/ Municipality in the Competitive Selection must prepare, and the PSP

58
in the Competitive Challenge approach must submit a Project Study. The costs of
preparing the Project Study may be reimbursed by the winning PSP to the Province/
City/ Municipality or Original Proponent, as the case may be, subject to the terms of
the bidding/ challenge.

(b) There is hereby created a JV - Selection Committee (JV-SC) for purposes of

selecting a PSP for a specific JV Project. The JV-SC, to be constituted and convened
by the Provincial Governor/ City Mayor/ Municipal Mayor, shall be composed of the
following:

(vii) Chairperson At least a third ranking officer of the Province/ City/

Municipality;
(viii) Secretary Provincial/ City/ Municipal Legal Officer;
(ix) The Provincial/ City/ Municipal Treasurer;
(x) The Provincial/ City/ Municipal Planning and Development Officer;
(xi) One (1) representative from and selected by the Sanggunian
Panlalawigan/ Panlungsod/ Bayan designated in an appropriate
resolution; and
(xii) Two (2) representatives from and chosen by the accredited civil
society groups, peoples and non-governmental organizations who are
members of the Provincial/ City/ Municipal Development Council.

A quorum of the JV-SC shall be composed of a simple majority of all voting members.
The Chairperson shall vote only in case of a tie.

The JV-SC with the approval of the Provincial Governor/ City Mayor/ Municipal
Mayor may invite provisional non-voting members from the national government
agencies, regulatory agencies, NEDA, DILG, COA and the private sector to observe in
the proceedings of the JV-SC; and form a support staff composed of employees and
staff of the Province/ City/ Municipality.

(c) The JV-SC shall be responsible for all aspects of the pre-selection and selection
process, including, among others, the preparation or evaluation of the Project Study
and selection/ tender documents; determination of the minimum designs,
performance standards/ specifications, economic parameters or appropriate tariff-
setting mechanism; drafting or evaluation of the JVA; publication of the invitation to
apply for eligibility and submission of proposals or comparative proposals; defining
the eligibility requirements, appropriate form and amount of proposal securities,
and schedules of the selection and challenge processes; pre-qualification of
prospective PSPs, bidders or challengers; conduct of pre-selection conferences and
issuance of supplemental notices; interpretation of the rules regarding the selection
process; conduct of the selection or challenge process; evaluation of the legal,
financial and technical aspects of the proposals; resolution of disputes between PSPs

59
and challengers; defining the appeals mechanisms; and recommendation for the
acceptance of the proposal and/ or for the award of the contract.

(d) All recommendations of the JV-SC shall be submitted to the Provincial Governor/
City Mayor/ Municipal Mayor for consideration and approval. The Provincial
Governor/ City Mayor/ Municipal Mayor shall approve the tender documents and
the draft JVA before they are issued to the prospective PSPs/ bidders.

(e) All JVAs must be signed by the Provincial Governor/ City Mayor/ Municipal Mayor
with prior authorization by the Sanggunian Panlalawigan/ Panlungsod/ Bayan.

(f) During the consideration of the draft JVA by the Sanggunian Panlalawigan/
Panlungsod/ Bayan, a public consultation/ hearing shall be conducted explaining the
JV Project, draft JVA, accountability mechanisms built into the JV arrangement, the
benefits and costs of the JV Project, among other relevant matters.

(g) After the signing of the JVA by the Provincial Governor/ City Mayor/ Municipal
Mayor, the JV-SC shall issue the Notice of Award to the PSP.

Sec. 13. Competitive Procedures. (a) In the selection of the PSP, there shall be
procedures available for the Province/ City/ Municipality, i.e., Competitive Selection,
Limited Negotiations, and Competitive Challenge.

(b) The Competitive Selection procedure shall consists of the following steps:
advertisement, issuance of instructions and tender documents, conduct of pre-bid
conferences, eligibility screening of prospective bidders, receipt and opening of bids,
posting of proposal securities, evaluation of bids, post-qualification, and award of
contract.

(c) Where the Province/ City/ Municipality:

i. fails to identify an eligible PSP for a desired JV activity when there is only
one qualified bidder after subjecting the same to a competitive selection
or bidding, or

ii. considers a project or activity either through competitive selection or

competitive challenge where an indispensable or integral component
thereof has already been subjected to a competitive process by the
appropriate administrative agency, government instrumentality or
government-owned and -controlled corporation which gives the PSP/
offerer a vested and exclusive right over that component without which,

60
 the PPP Project cannot be implemented as envisioned, Limited
Negotiations may take place.

The negotiations will cover all the technical and financial aspects of the JV
project or activity; provided, that the minimum designs, performance
standards/ specifications and economic parameters stated in the
Feasibility or Project Study and Terms of Reference for the Competitive
Selection are complied with. The Provincial Governor/ City/ Municipal
Mayor shall approve the terms of the Limited Negotiations prior to the
award of the contract to the PSP. Under the 2nd instance, the Province/
City/ Municipality shall publish a notice to the public prior to the start of
the negotiations, and if pursued under Competitive Challenge, the 3 rd
stage as defined below may be dispensed with.

(d) The Competitive Challenge process shall be divided into three (3) Stages,
described as:

Stage One/ Unsolicited Proposal The steps are:

(v) A PSP submits an unsolicited proposal accompanied by a Project Study and

draft JV Agreement to the Province/ City/ Municipality for a projected JV
Project.
(vi) The JV-SC shall make a determination of the completeness of the unsolicited
proposal, the eligibility of the PSP, the necessity for the proposed project, the
consistency of the terms of the draft JV Agreement with this Ordinance,, and
the appropriateness of the JV modality.
(vii) Upon completion of the initial evaluation, the Provincial Governor/
City Mayor/ Municipal Mayor, upon recommendation of the JV-SC, shall
either issue a certificate of acceptance or non-acceptance of the proposal for
purposes of detailed negotiations. Upon the issuance of the certificate of
acceptance, the PSP is ipso facto conferred original proponent status and no
other proposal for the same project may be subjected to the competitive
challenge process.
(viii) If there is more than one unsolicited proposal submitted for the same
JV Project, the Provincial Governor/ City Mayor/ Municipal Mayor, upon
recommendation of the JV-SC, may reject all proposals and pursue
competitive selection, or accept the unsolicited proposal that is complete and
provides the greater advantage and benefits to the community and revenues
to the Province/ City/ Municipality.

Stage Two/ Detailed Negotiations The steps are:

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 (v) The parties shall negotiate and agree on the terms and conditions of the JV
Project concerning its technical and financial aspects.
(vi) Once negotiations are successful, the Parties shall issue a joint certification
stating that an agreement has been reached and specifying the eligibility of
the PSP and the technical and financial aspects of the JV Project as agreed
upon.
(vii) The issuance of the certification commences the activities for the
solicitation for comparative proposals.
(viii) However, should negotiations not result to an agreement acceptable
to both parties, the Province/ City/ Municipality shall have the option to
reject the proposal by informing the PSP in writing stating the grounds for
rejection and thereafter may accept a new proposal from other PSPs, decide
to pursue the proposed activity through other PPP Modalities or subject the
JV Project to a Competitive Selection.

Stage Three/ Competitive or Swiss Challenge The steps are:

(vii) The JV-SC shall prepare the tender documents. The eligibility criteria
used in determining the eligibility of the private sector entity shall be the
same as those stated in the tender documents. Proprietary information shall,
however, be respected and protected, and treated with confidentiality. As
such, it shall not form part of the tender and related documents.
(viii) The Provincial Governor/ City Mayor/ Municipal Mayor shall approve
all tender documents including the draft contract before the publication of
the invitation for comparative proposals.
(ix) The JV-SC shall publish the invitation for comparative proposals.
(x) The PSP or Original Proponent shall post the proposal security at the date of
the first day of the publication of the invitation for comparative proposals in
the amount and form stated in the tender documents.
(xi) In the evaluation of proposals, the best offer shall be determined to include
the original proposal of the PSP. If the Province/ City/ Municipality
determines that an offer made by a comparative PSP or challenger other than
the negotiated terms with original proponent is superior or more
advantageous to the Province/ City/ Municipality than the original proposal,
the PSP who submitted the original proposal shall be given the right to match
such superior or more advantageous offer. Should no matching offer be
received within the stated period, the JV Project shall be awarded to the
comparative PSP submitting the most advantageous proposal. If a matching
offer is received within the prescribed period, the JV Project shall be awarded
to the original proponent. If no comparative proposal is received by the
Province/ City/ Municipality, the JV Project shall be immediately awarded to
the original proponent.

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 (xii)In the event that the Original Proponent is not able to match the superior
offer of the challenger, the winning challenger shall reimburse, within 30
days from issuance of the notice of award, the original proponent the cost of
preparing the project study, provided, that this reimbursement arrangement
and the cost of preparing of the project study are expressly stated in the
terms of reference for the competitive challenge, and that the JV-SC has
determined that the cost is reasonable.

(e) The Provincial Governor/ City Mayor/ Municipal Mayor through an executive
order, upon recommendation of the JV-SC, shall have the authority to adopt and
prescribe the appropriate schedules and timelines for each PSP selection process:
provided, that the periods are reasonable and will not undermine free competition,
transparency and accountability.

Sec. 14. JV Regulatory Authoritys Mandate. (a) There shall be a JV Regulatory

Authority (JV-RA) which shall be composed of the following:

(viii) Chairperson The Provincial Governor/ City Mayor/ Municipal Mayor

or the Provincial/ City/ Municipal Administrator if so designated by
the Mayor;
(ix) Vice-Chairperson Vice-Governor/ Vice-Mayor or a member of the
Sanggunian Panlalawigan/ Panlungsod/ Bayan to be chosen by the
Sanggunian as evidenced by an appropriate resolution;
(x) Two (2) representatives of the Sanggunian Panlalawigan/ Panlungsod/
Bayan belonging to two (2) distinct registered political parties to
which the Provincial Governor/ City Mayor/ Municipal Mayor does
not belong to chosen on the basis of proportional representation of
all parties represented in the Sanggunian Panlalawigan/ Panlungsod/
Bayan;
(xi) Provincial/ City/ Municipal Legal Officer;
(xii) Provincial/ City/ Municipal Treasurer;
(xiii) Provincial/ City/ Municipal Planning and Development Officer; and
(xiv) Two (2) representatives from and chosen by the accredited civil
society groups, peoples and non-governmental organizations who are
members of the Provincial/ City/ Municipal Development Council.
These representatives shall not be the same representatives in the JV-
SC.

A quorum of the JV-RA shall be composed of a simple majority of all voting

members. The Chairperson shall vote only in case of a tie.

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The JV-RA with the approval of the Provincial Governor/ City Mayor/ Municipal
Mayor may invite third party experts to attend its meetings to act as advisors and
observers. Such third party experts may represent national government agencies,
regulatory agencies, the NEDA, the DILG, COA, private sector, non-governmental
organizations and civic groups.

The JV-RA may form a support staff composed of employees and personnel of the
Province/ City/ Municipality. The JV-RA may also engage consultants hired pursuant
to law.

(b) The JV-RA, on behalf of the Province/ City/ Municipality, shall be tasked with
performing contract management functions, such as partnership management (i.e.,
corporate governance, communication and information sharing, and dispute
resolution), performance or service delivery management (i.e., risk management and
performance management), and contract administration (i.e., variation
management, contract maintenance and financial administration). Aside from these,
the JV-RA shall be responsible for setting and monitoring the tariff, and
administering the subsidy pursuant to the JVA.

Sec. 15. Accountability Mechanisms. (a) Before commencing their functions, each
member of the JV-SC and JV-RA shall sign a Code of Conduct, which shall guide each
member in the performance of their duties as such.

Such Code of Conduct shall require each member to, among others:

1. act at all times in accordance with relevant legislation and regulations;

2. act at all times with fidelity, honesty, integrity and in the best interests of the
Province/ City/ Municipality and its constituents;
3. recognize the publics right to access to information in accordance with law;
4. not misuse his or her position and privileges of a member of the JV-SC and JV-
RA, whether or not such will prejudice the interest of the public, the PSP, or
any third person;
5. to take the utmost care in ensuring reasonable protection of the records of
each JV project, and to not disclose any confidential and proprietary
information to persons without a need to know such information, or in
violation of any non-disclosure requirements under law or contract;
6. carry out his or her duties with the skill and care expected from a person of
knowledge and experience, and to exercise prudent judgment;
7. forthwith report to the appropriate authorities any act of negligence, fraud,
corruption, misuse of government funds, failure or refusal to perform duties,
or any other act which may constitute an crime or offense, or which is

64
 prejudicial to the public interest, in the selection of the PSP and
implementation of a JVA;
8. forthwith declare any personal or business interest that he or she, or any of
his or her relatives within the fourth degree of affinity or consanguinity, may
have in any business of a PSP, in which case, the official or representative
shall no longer be a member of the JV-SC and JV-RA;
9. forthwith declare any conflict of interest, insofar as the JV Project concerned,
that he or she may have or will have, in which case, the official or
representative shall not longer be a member of the JV-SC and JV-RA;
10. not vote or act in a particular way on any matter in consideration of any
offer, promise, gift or present, from a member of the public, government, a
political party, social group or non-governmental organization, or any
stakeholder or potential stakeholder;
11. not receive any gift or anything else of value which is or may be viewed as
aimed at influencing or directing his or her vote or actions; and
12. to disclose immediately to the JV-SC or JV-RA as the case may be, any
attempted inducement that may be construed as aimed at influencing or
directing his or her acts as a member of the JV-SC and JV-RA.

(b) The Province/ City/ Municipality shall ensure, promote and eliminate all obstacles
to social accountability and allow and enhance constructive engagement between
citizens groups, academe, consumers, rate-payers, general public, Province/ City/
Municipality, national government agencies, regulatory agencies, and PSP.

Sec. 16. Appropriations. To carry out the provisions of this Code, the amount of
(amount) Pesos (P [figures]) shall be appropriated. Thereafter, such sums as may be
necessary for the continuous implementation of this Code shall be included in the
annual budget of the Province/ City/ Municipality.

Sec. 17. Alternative Dispute Resolution. All JVAs of the Province/ City/ Municipality
shall include a provision on the use of Alternative Dispute Resolution (ADR)
mechanisms in resolving disputes arising from the JVA. All controversies in
connection with JV undertakings and projects of the Province/ City/ Municipality
shall likewise be addressed using ADR.

Sec. 18. Implementing Rules. While this Code and the provisions hereof are already
operative upon the Codes effectivity, the Provincial Governor/ City Mayor/
Municipal Mayor may issue the appropriate and relevant rules and regulation for the
proper implementation of the Code or its provisions.

Sec. 19. Application of Other PPP Laws and Regulations. Whenever relevant and
appropriate as determined by the Provincial Governor/ City Mayor/ Municipal Mayor

65
and in the absence of a specific provision to the contrary, upon recommendation of
the JV-SC and JV-RA as the case may be, the provisions of the BOT Law, GPRA,
Executive Order No. 301 (26 July 1987), COA Circular No. 89-296 (January 27, 1989),
and their applicable rules and regulations, and the 2008 or 2013 JV Guidelines
adopted by the NEDA shall apply in a suppletory manner.

Sec. 20. Separability Clause. If, for any reason, any section or provision of this Code
or any part thereof, or the application of such section, provision or portion is
declared invalid or unconstitutional, the remainder thereof shall not be affected by
such declaration.

Sec. 21. Repealing Clause. All ordinances and resolutions or parts thereof
inconsistent with the provisions of this Code are hereby repealed or modified
accordingly.

Sec. 22. Effectivity. This Code shall take effect fifteen (15) days after its posting in
two conspicuous places within the Province/ City/ Municipality.

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 C. PROPOSED LGU LEASE ORDINANCE
November 23, 2014

Ordinance No. ____

Series of 20___

A PROVINCIAL/ CITY/ MUNICIPAL ORDINANCE PRESCRIBING GUIDELINES AND

PROCEDURES FOR ENTERING INTO LEASE AGREEMENTS OVER REAL PROPERTIES
OWNED BY THE PROVINCE/ CITY/ MUNICIPALITY WITH PRIVATE ENTITIES,
CONSISTENT WITH PERTINENT LAWS, RULES AND REGULATIONS

WHEREAS, Section 2, Article X of the 1987 Philippine Constitution mandates that all
local government units (LGUs) shall enjoy local autonomy and administrative
autonomy;

WHEREAS, further Section 5, Article X of the Constitution directs that each LGU shall
have the power to create its own sources of revenues and by virtue of this right,
LGUs shall enjoy fiscal autonomy;

WHEREAS, Section 2(a) of Republic Act No. 7160, otherwise known as the Local
Government Code of 1991 (LGC), declares it a policy of the State that its territorial
and political subdivisions shall enjoy genuine and meaningful local autonomy to
enable them to attain their fullest development as self-reliant communities and to
make them more effective partners in the attainment of national goals;

WHEREAS, Section 5(a) of the LGC further provides that any provision on the power
of a LGU shall be liberally interpreted in its favor. Any fair and reasonable doubt as to
the existence of the power shall be interpreted in favor of the local government unit
concerned;

WHEREAS, Section 18 of the LGC expressly empowers LGUs to establish an

organization that shall be responsible for the efficient and effective implementation
of their development plans, program objectives and priorities; to create their own
sources of revenue and to allocate their resources in accordance with their own
priorities; and to acquire, develop, lease, encumber, alienate, or otherwise dispose
of real or personal property held by them in their proprietary capacity and to apply
their resources and assets for productive, developmental, or welfare purposes, in
the exercise or furtherance of their governmental or proprietary powers and
functions and thereby ensure their development into self-reliant communities and
active participants in the attainment of national goals;

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WHEREAS, Section 22 of the LGC vests LGUs with corporate powers and grants them
full autonomy in the exercise of their proprietary functions and in the management
of their economic enterprises;

WHEREAS, the Province/ City/ Municipality owns real properties that remain
undeveloped, underdeveloped and underutilized, which the Provincial/ City/
Municipal Government is very keen on maximizing the potential for development
and revenue;

WHEREAS, the Provincial/ City/ Municipal Government believes that entering into
lease contracts over real properties of the Province/ City/ Municipality is a viable
Public-Private Partnership (PPP) approach worth exploring in view of the simplicity of
procedures and approval process, as well as the very reasonable period to negotiate
said contracts;

WHEREAS, according to the Governing Procurement Policy Board (NPM 135-2004

dated 14 October 2004), in case the government entity is leasing its existing assets,
the activity does not involve expenditure of government funds, inasmuch as the
same is not in the nature of procurement. Lease of assets, where the government is
the lessor, contemplates income-generating activities and is well beyond the ambit
of R.A. 9184;

WHEREAS, when the government, the Province/ City/ Municipality in this case, is the
lessor in instances where it intends to lease out of government real property, the
governing regulation is Executive Order No. 301, Series of 1987. However, E.O. 301
provides for decentralization of government contracts, leases included. Heads of
agencies, like the Provincial/ City/ Municipal Government, shall have the authority to
determine the reasonableness of the terms of the lease and the rental rates thereof,
and to enter into such lease contracts without need of prior approval from higher
authorities, subject to compliance with the uniform standards or guidelines
established under the E.O. 301 and to the audit jurisdiction of the Commission on
Audit;

WHEREAS, having a Provincial/ City/ Municipal framework on leases and affermage

over Provincial/ City/ Municipal real properties, in ordinance form, will simplify,
clarify, institutionalize the requirements for a lease arrangement and procedures for
the selection of the Private Sector Proponent or Lessee that promote consistency,
accountability, transparency and efficiency;

NOW THEREFORE, on motion of Board Member/ Councilor (name), duly seconded by

Board Member(s)/ Councilor(s) (name[s]),

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BE IT ORDAINED, by the Sangguniang Panlalawigan/ Panlungsod/ Bayan of (name)
in session assembled that:

SECTION 1. Title. This Ordinance shall be known as the Ordinance Governing

Lease of Real Properties Owned by the Provincial/ City/ Municipal Government of
(name) or the (Name) Lease Ordinance.

Sec. 2. Statement of Policies. It is hereby declared the policy of the Province/ City/
Municipality to fully utilize and benefit from the Provinces/ Citys/ Municipalitys
real properties in order to promote the general welfare, attain sustainable
development and augment the resources of the Province/ City/ Municipality. A lease
or affermage arrangement is considered a viable option for the efficient and
productive use of Provinces/ Citys/ Municipalitys real properties, and to cut costs
and/or generate resources, while at the same time promote the participation of
private sector proponents/ lessees (PSP/Ls) as active partners towards a robust
Provincial/ City/ Municipal economy.

Sec. 3. Principles. All lease or affermage contracts entered into by the Province/
City/ Municipality with PSP/Ls shall ensure that the most advantageous terms and
conditions to the Province/ City/ Municipality and its constituents.

Sec. 4. Definition of Terms. For purposes of this Ordinance, the terms:

1. Affermage refers to a contractual arrangement providing for use of a

real property of the Province/ City/ Municipality and/ or the operation,
maintenance, and management services by the PSP/L, including working
capital and/or improvements to an existing infrastructure or development
facility leased by the PSP/L from the Province/ City/ Municipality for a
fixed term. The Province/ City/ Municipality and the PSP/L share revenue
from customers/ locators/sub-lessees wherein the PSP/L pays the
Province/ City/ Municipality an affermage fee, which varies according to
demand and customer tariffs, and retains the remaining revenue;

2. Bids and Awards Committee (BAC) refers to the Bids and Awards
Committee of the Province/ City/ Municipality created under Republic Act
No. 9184 or the Government Procurement Reform Act. The Provincial
Governor/ City Mayor/ Municipal Mayor may expand the composition of
the BAC for purposes of this Ordinance which may include representatives
of the Sangguniang Panlalawigan/ Panglungsod/ Bayan, civil society
organizations, academe, national government offices, regulatory agencies,
National Economic and Development Authority, and Commission on Audit;

69
3. Province/ City/ Municipality or Provincial/ City/ Municipal Government
refers to the Provincial/ City/ Municipal Government of (name);

4. Competitive Challenge refers to an alternative selection process wherein

third parties or challengers shall be invited to submit comparative
proposals to an unsolicited proposal submitted by the PSP/L. Accordingly,
the PSP/L who submitted the unsolicited proposal, or the original
proponent, is accorded the right to match any superior offers given by a
comparative PSP/L;

5. Competitive Negotiations refers to a process where the Province/ City/

Municipality negotiates with eligible and qualified PSP/Ls and awards the
project to that PSP/L which offers the best combination of quality and
price;

6. Competitive Selection refers to a method of selection initiated and

solicited by the Province/ City/ Municipality, based on a transparent
criteria, which is open to participation by any interested party;

7. Real Property refers to land, buildings, and/ or real property of the

Province/ City/ Municipality;

8. Lease refers to a contractual arrangement providing for use of a real

property of the Province/ City/ Municipality and/ or the operation,
maintenance, and management services by the PSP/L, including working
capital and/or improvements to an existing infrastructure or development
facility leased by the PSP/L from the Province/ City/ Municipality for a
fixed term. Under a lease arrangement, the PSP/L, subject to the lease
contract, retains revenue collected from customers and makes a specified
lease payment to the Province/ City/ Municipality;

9. Lessor refers to the Province/ City/ Municipality having absolute

ownership over the real property to be leased;

10. Limited Negotiations refers to a process whereby the Province/ City/

Municipality negotiates with the PSP/L in instances when there is only one
eligible and qualified PSP/L in a competitive selection process, under Stage
2 of the competitive challenge process, or when there is a prior completed
competitive process;

11. Private Sector Proponent or Lessee (PSP/L) refers to the entity

temporarily occupying a real property on the basis of a lease contract
executed with the Lessor;

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 12. Project Study refers to a study, full or pre-feasibility study or business
case prepared by the Province/ City/ Municipality in a competitive
selection or limited or competitive negotiations, or a PSP/L when
submitting an unsolicited proposal, containing or indicating, as far as
practicable a needs analysis, affordability assessment, value for money
assessment, preliminary risk assessment, stakeholder assessment, human
resource assessment, bankability assessment, legal viability assessment,
market testing if relevant, indicative transaction implementation plan, and
draft lease contract;

13. Rental Rate and/or Share in Revenues refers to the amount paid by the
PSP/L for the use, enjoyment or occupancy of the real estate to the lessor,
where payment is usually made on a monthly basis and/ or a fixed
percentage of gross revenues generated by the lessee. The Province/ City/
Municipality may also be entitled to a share in the revenues from the
activities and businesses on the leased property; and

14. Sangguniang Panlalawigan/ Panlungsod/ Bayan refers to the

Sangguniang Panlalawigan/ Panlungsod/ Bayan of (name).

Sec. 5. General Guidelines. The general guidelines in lease or affermage

arrangements are:

1. As a general rule, rental rates are considered reasonable when they

represent or approximate the value of what the LSP/L gets in terms of the
business, activity, accommodation, facility, amenities, and convenience
from the leased real property, and the Province/ City/ Municipality gets an
equitable share in the revenues, return of capital or investment.

2. Rental rates may consider the prevailing market rates for lease of real
estate or venue with the same or similar condition or classification and
located within the vicinity.

3. The contract of lease shall be embodied in a public instrument and shall

integrate all the covenants, understanding and agreements of the
Province/ City/ Municipality and the PSP/L.

4. The lease contracts should be recorded in the Registry of Property.

5. The lessee cannot sublease the real property subject of the lease contract,
unless otherwise agreed upon, provided, that such agreement is expressly
spelled out in the lease contract that was duly executed by the Province/
City/ Municipality and the PSP/L.

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 6. The PSP/L cannot assign the lease without the consent of the Province/
City/ Municipality, unless there is a stipulation to the contrary in the lease
contract that was duly executed by the Province/ City/ Municipality and
the PSP/L.

7. The lease contract shall not contemplate a divestment or disposition of

the real property of the Province/ City/ Municipality, unless there is a
stipulation to the contrary in the lease contract that was duly executed by
the Province/ City/ Municipality and the PSP/L, provided, that a
competitive process or public auction is undertaken by the Province/ City/
Municipality.

Sec. 6. Procedures. (a) Subject to the guiding principle that the lease contract
should provide the most advantageous terms and conditions to the Province/ City/
Municipality and its constituents, the Provincial Governor/ City Mayor/ Municipal
Mayor, as duly authorized by the Sanggunian Panlalawigan/ Panlungsod/ Bayan,
shall enter into a lease contract through either competitive selection, limited or
competitive negotiations with PSP/Ls; Provided, that the real property involved in
the lease contract should be identified in said authority given by the Sangguniang
Panlalawigan/ Panlungsod/ Bayan; Provided further, that the PSP/L should be
lawfully authorized to execute said lease contracts; Provided finally, that the
minimum terms and conditions contained in this Ordinance shall have been faithfully
incorporated in the said lease contract.

(b) Upon favorable endorsement by the BAC and authorization by the

Sangguniang Panlalawigan/ Panlungsod/ Bayan, the Provincial Governor/ City
Mayor/ Municipal Mayor may choose any of the procedures set forth herein.

(c) Competitive Selection. (i) The Competitive Selection procedure shall

consists of the following steps: advertisement, issuance of instructions and tender
documents, conduct of pre-bid conferences, eligibility screening of prospective
bidders, receipt and opening of bids, posting of proposal securities, evaluation of
bids, post-qualification, and award of contract.

(ii) The Provincial Governor/ City Mayor/ Municipal Mayor, acting on the
recommendation of the BAC, shall approve the tender documents and the draft
lease contract before they are issued to the prospective PSP/Ls/ bidders.

(d) Limited Negotiations. Where the Province/ City/ Municipality:

(i) fails to identify an eligible PSP/L for the lease project when there is only one
qualified bidder after subjecting the same to a competitive selection; or

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(ii) considers a project or activity on the leased property either through competitive
selection or competitive challenge where an indispensable or integral component
thereof has already been subjected to a competitive process by the appropriate
administrative agency, government instrumentality or government-owned and -
controlled corporation which gives the PSP/L a vested and exclusive right over that
component without which, the lease project cannot be implemented as envisioned,

Limited Negotiations may take place. The negotiations will cover all the aspects of
the lease arrangement; provided, that conditions and parameters stated in the Study
and tender documents are complied with. The Provincial Governor/ City Mayor/
Municipal Mayor shall approve the terms of the Limited Negotiations prior to the
award of the contract to the PSP/L. Under the 2 nd instance, the Province/ City/
Municipality shall publish a notice to the public prior to the start of the negotiations,
and if pursued under Competitive Challenge, the 3rd stage as defined below may be
dispensed with.

(e) Competitive Negotiations. The Province/ City/ Municipality may invite

two or more qualified PSP/Ls to enter into negotiations for a lease project, informing
all the qualified PSP/Ls-offerors that there is more than one offeror, if that is the
case, and simultaneous negotiations are being conducted and that the lease contract
shall be awarded to the PSP/L which offers the best combination of quality and price
based on the study prepared by the Province/ City/ Municipality. Prior to the start of
the negotiations with the identified PSP/Ls, the Province/ City/ Municipality shall
notify the public of the process.

(f) Competitive Challenge. The Competitive Challenge process shall be

divided into three (3) Stages, described as:

Stage One/ Unsolicited Proposal The steps are:

a. A PSP/L submits an unsolicited proposal accompanied by a Study and draft

lease contract to the Province/ City/ Municipality for a projected lease
Project.

b. The BAC shall make a determination of the completeness of the unsolicited

proposal, the eligibility of the PSP/L, the necessity for the proposed lease
project, the consistency of the terms of the draft lease contract with this
Ordinance, and the appropriateness of the proposed PPP modality.

c. Upon completion of the initial evaluation, the Provincial Governor/ City

Mayor/ Municipal Mayor, upon recommendation of the BAC, shall either
issue a certificate of acceptance or non-acceptance of the proposal for

73
 purposes of detailed negotiations. Upon the issuance of the certificate of
acceptance, the PSP/L is ipso facto conferred original proponent status and
no other proposal for the same project may be subjected to the competitive
challenge process.

d. If there is more than one unsolicited proposal submitted for the same lease
project, the Provincial Governor/ City Mayor/ Municipal Mayor, upon
recommendation of the BAC, may reject all proposals and pursue competitive
selection, enter into competitive negotiations if appropriate, or accept the
unsolicited proposal that is complete and provides the greater advantage and
benefits to the community and revenues to the Province/ City/ Municipality.

Stage Two/ Detailed Negotiations The steps are:

a. The Parties shall negotiate and agree on the terms and conditions of the
lease project.

b. Once negotiations are successful, the Parties shall issue a joint certification
stating that an agreement has been reached and specifying the eligibility of
the PSP/L and the aspects of the lease project as agreed upon.

c. The issuance of the certification commences the activities for the solicitation
for comparative proposals.

d. However, should negotiations not result to an agreement acceptable to both

parties, the Province/ City/ Municipality shall have the option to reject the
proposal by informing the PSP/L in writing stating the grounds for rejection
and thereafter may accept a new proposal from other PSP/Ls, decide to
pursue the proposed activity through other PPP modalities, subject the lease
to a competitive selection or competitive negotiations.

Stage Three/ Competitive or Swiss Challenge Proper The steps are:

a. The BAC shall prepare the tender documents. The eligibility criteria used in
determining the eligibility of the PSP/L shall be the same as those stated in
the tender documents. Proprietary information shall, however, be respected
and protected, and treated with confidentiality. As such, it shall not form part
of the tender and related documents.

b. The Provincial Governor/ City Mayor/ Municipal Mayor shall approve all
tender documents including the draft lease contract before the publication of
the invitation for comparative proposals.

74
 c. The BAC shall publish the invitation for comparative proposals.

d. The PSP/L which is the Original Proponent shall post the proposal security at
the date of the first day of the publication of the invitation for comparative
proposals in the amount and form stated in the tender documents.

e. In the evaluation of proposals, the best offer shall be determined to include

the original proposal of the PSP/L. If the Province/ City/ Municipality
determines that an offer made by a comparative PSP/L or challenger other
than the negotiated terms with original proponent is superior or more
advantageous to the Province/ City/ Municipality than the original proposal,
the PSP/L who submitted the original proposal shall be given the right to
match such superior or more advantageous offer. Should no matching offer
be received within the stated period, the lease project shall be awarded to
the comparative PSP/L submitting the most advantageous proposal. If a
matching offer is received within the prescribed period, the lease project
shall be awarded to the original proponent. If no comparative proposal is
received by the Province/ City/ Municipality, the lease project shall be
immediately awarded to the original proponent.

f. In the event that the original proponent is not able to match the superior
offer of the challenger, the winning challenger shall reimburse, within 30
days from issuance of the notice of award, the original proponent the cost of
preparing the study, provided, that this reimbursement arrangement and the
cost of preparing of the project study are expressly stated in the terms of
reference for the competitive challenge, and that the BAC has determined
that the cost is reasonable.

(g) The Provincial Governor/ City Mayor/ Municipal Mayor, through an

executive order, upon the recommendation of the BAC, shall have the authority to
adopt and prescribe the appropriate schedules and timelines for each selection
procedure, provided, that the periods are reasonable and will not undermine free
competition, transparency and accountability.

Sec. 7. Minimum Terms and Conditions. The contract of lease shall include, but not
limited to, the following terms and conditions:

1. Obligations of the Province/ City/ Municipality (a) To allow the PSP/L free
and interrupted use of the real property, building or facility for the use
stipulated under the lease contract; and

75
 (b) To grant an exclusive right to the PSP/L over the property for the use
thereof based on the activities and businesses agreed upon.

2. Obligations of the PSP/L (a) To pay promptly and regularly the rentals and
the share of the Province/ City/ Municipality as agreed upon in a manner
specified in the contract;

(b) To surrender the real property upon expiration of the lease contract and
to shoulder damages which the Province/ City/ Municipality may suffer for
failure to surrender the same; and

(d) To faithfully comply with the terms and conditions of the agreement.

3. Rights of the Province/ City/ Municipality (a) In the event the real property
is deserted by the PSP/L before the expiration of the lease without the
justifiable cause, the Province/ City/ Municipality shall have the right to
enter and re-let the same and receive the rentals corresponding to the
unexpired period of the lease; and

(b) To terminate the lease contract and eject the PSP/L for failure or refusal
of the latter to pay the rentals and share of the Province/ City/ Municipality
as agreed upon during the period stipulated in the lease contract or for
violation of contract conditions by the lessee.

4. Rights of the PSP/L (a) To withhold payment of rentals in the event the
Province/ City/ Municipality fails to make the necessary repairs of damages
leased facilities to any portion of the leased building which is its obligation
to repair under the agreement within reasonable time and to undertake
such repairs applying the rentals due to cover the cost thereof;

(b) To occupy and use exclusively the real property leased to the exclusion
of the Province/ City/ Municipality or its representatives; and

(c) To introduce improvements in the real property, subject to prior consent

of the lessor under such terms and conditions as may be agreed upon.

5. Project Oversight Committee A Project Oversight Committee composed of

representatives of the Province/ City/ Municipality and the PSP/L shall be
established that will responsible for overseeing, monitoring the lease

76
 project and ensuring compliance with the terms and conditions of the lease
contract.

Sec. 8. Duration of Lease Contracts. Subject to the guiding principle that that the
lease contract should provide the most advantageous terms and conditions to the
government, the Province/ City/ Municipality shall exercise discretion in determining
the reasonable period for the lease contract.

Sec. 9. Termination of Lease Contracts. Except for causes expressly stipulated in

the lease contract, neither party shall have the authority to unilaterally terminate
the contract. Termination that is not due to causes provided in the contract shall be
mutually agreed upon.

Sec. 10. Prior Authorization from the Sanggunian. Prior to signing the lease contract
by the Provincial Governor/ City Mayor/ Municipal Mayor, the lease contract will
have to be presented to Sangguniang Panlalawigan/ Panglungsod/ Bayan for review
and approval. The Sangguniang Panlalawigan/ Panglungsod/ Bayan shall issue the
appropriate resolution authorizing the Provincial Governor/ City Mayor/ Municipal
Mayor to sign and execute the lease contract on behalf of the Province/ City/
Municipality.

Sec. 11. Separability Clause. If any provision/s of this Ordinance is held

unconstitutional or invalid, the other provisions unaffected thereby shall remain in
full force and effect.

Sec. 12. Repealing Clause. All ordinances, executive orders and issuances, or parts
thereof, inconsistent wit the provisions of this Ordinance are hereby repealed or
modified accordingly.

Sec. 13. Effectivity Clause. This Ordinance shall take effect fifteen (15) days after its
posting in two conspicuous places within the Province/ City/ Municipality.

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 D. PROPOSED LGU CORPORATIZATION ORDINANCE
November 23, 2014

Ordinance No. ____

Series of 20___

A PROVINCIAL/ CITY/ MUNICIPAL ORDINANCE CREATING THE (NAME)

DEVELOPMENT CORPORATION; APPROVING THE ARTICLES OF INCORPORATION
AND BY-LAWS THEREFOR; ESTABLISHING A BOARD OF DIRECTORS TO GOVERN THE
AFFAIRS OF THE CORPORATION; AND PROVIDING HOW THE CORPORATION SHALL
CONDUCT ITS AFFAIRS

BE IT ORDAINED, by the Sangguniang Panlalawigan/ Panlungsod/ Bayan of (name)

in session assembled that:

SECTION 1. Declaration of Policy. It is hereby declared the policy of the Province/

City/ Municipality of Pampanga to fully exercise genuine and meaningful local
autonomy in the exercise of its proprietary functions and in the management of its
economic enterprises through the creation of a stock corporation under Batas
Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines.

Sec. 2. Authority Created. The creation of a corporation is hereby authorized, with

powers and limitations as set forth in its Articles of Incorporation, By-Laws, and this
Ordinance, to carry out lawful business activities for the economic development of
the Province/ City/ Municipality, including: undertaking, assisting or otherwise
facilitating or providing economic stimulus to the Province/ City/ Municipality; acting
as liaison between private entities and the Provincial/ City/ Municipal Government
to evaluate the suitability of the Province/ City/ Municipality as an expansion,
location, or relocation site; shepherding private development projects through
public processes; developing the use of publicly-owned property for economic
development purposes; providing direct and/or indirect financial assistance to
development projects; ensuring the availment of appropriate workforce
recruitment, retention, and training services; and serving as holding company of
subsidiary companies which may now or hereafter be created.

Sec, 3. Name. The name of the Corporation shall be (Name) Development

Corporation (Corporation).

Sec. 4. Authorized Capital Stock. - The authorized capital stock of the Corporation
shall be (amount in words), Philippine Pesos (PhP [amount in figures]) divided into
(amount in words) (amount in figures) shares with a par value of (amount in words),
Philippine Pesos (PhP [amount in figures]) per share. The authorized capital stock
shall be wholly owned by the Province/ City/ Municipality as follows, subject only to

78
the qualifying shares of the members of the Board of Directors as provided in
Section 11 hereof:

Name of Shareholder Number of Shares Percentage of

Ownership (%)
Province/ City/ Municipality (total less 5) 100.00
(name) (Incumbent Provincial Governor/ 1 0.00
City Mayor/ Municipal Mayor)
Provincial/ City/ Municipal Treasurer 1 0.00
Provincial/ City/ Municipal Planning and 1 0.00
Development Coordinator
Nominee 1 0.00
Nominee 1 0.00
Total (value) (value)

Sec. 5. Principal Office. The principal office of the Corporation shall be established
in the the Province/ City/ Municipality.

Sec. 6. Term. The Corporation shall exist for a term of Fifty (50) years from and
after the date of issuance of its Certificate of Incorporation by the Securities and
Exchange Commission.

Sec. 7. Provincial/ City/ Municipal Liability Limited - The Corporation is an

independent legal entity exclusively responsible for its own debts, obligations, and
liabilities. All liabilities incurred by the Corporation shall be satisfied exclusively from
the assets and credit of the Corporation. No creditor or other person shall have any
recourse to the assets, credit, or services of the Province/ City/ Municipality on
account of any debt, obligation, liability, act, or omission of the Corporation.

Sec. 8. Powers. Except as limited by the Constitution, law, this Ordinance, or the
Articles of Incorporation and By-Laws of the Corporation, the Corporation shall have
and may exercise all lawful powers and perform all corporate functions which are
necessary or convenient to effect the purposes for which it is organized.

Sec. 9. Limitation of Powers. The powers of the Corporation shall be limited in the
following respects:

(a) The Corporation shall have no power of eminent domain nor any power to levy
taxes or special assessments.

(b) The Corporation may not incur or create any liability that permits recourse by
any party or member of the public to any assets, services, resources, or credit of

79
 the Province/ City/ Municipality. All liabilities incurred by the Corporation shall
be satisfied exclusively from the assets and credit of the Corporation. No creditor
or other person shall have any recourse to the assets, credit, or services of the
Province/ City/ Municipality on account of any debts, obligations, liabilities, acts,
or omissions of the Corporation.

(c) No funds, assets, or property of the Corporation shall be used for any political
activity or to further the election or defeat of any candidate for public office; nor
shall any funds or a substantial part of the activities of the Corporation be used
for publicity designed to support or defeat legislation.

Sec. 10. Articles of Incorporation and By-Laws The Articles of Incorporation and By-
Laws of the Corporation are hereby approved.

Sec. 11. Board of Directors. The powers and functions of the Corporation shall be
exercised by a Board of Directors composed of five (5) members as follows:

(a) The Provincial Governor/ City Mayor/ Municipal Mayor as ex officio Chairperson;

(b) The Provincial/ City Municipal Treasurer and the Planning and Development
Coordinator as ex officio members;

(c) Two (2) regular members who shall be nominated, elected, or designated by the
Sangguniang Panlalawigan/ Panlungsod/ Bayan on behalf of the Province/ City/
Municipality as the majority shareholder.

The members of the Board of Directors shall each own one (1) qualifying share in the
Corporation subject to the execution of a Declaration of Trust in favor of the
Province/ City/ Municipality.

Unless otherwise provided by law, the corporate powers of the Corporation shall be
exercised, all business conducted, and all property of the Corporation controlled and
held by the Board of Directors.

Sec. 12. Maintenance of and Access to Records. The Corporation shall file and
maintain a current listing of all corporate officials, their positions and home
addresses, their business and home phone numbers, and all other documents which
the Sangguniang Panlalawigan/ Panlungsod/ Bayan may require. Maintenance of
records shall be done in a manner consistent with pertinent laws, rules and
regulations. The Corporation shall keep an official journal consisting of the minutes
of proceedings at all meetings of the Board of Directors, and the resolutions of the
Board of Directors. Any person shall have access to records and information of the
Corporation to the extent allowed by law.

80
Sec. 13. Reports and Information. The Corporation shall file an annual financial
report with the Sangguniang Panlalawigan/ Panlungsod/ Bayan. The annual financial
report shall be in a form and include content acceptable to the Sangguniang
Panlalawigan/ Panlungsod/ Bayan.

Sec. 14. Audit. The Corporation shall make available for examination to the
Sangguniang Panlalawigan/ Panlungsod/ Bayan and the Provincial/ City/ Municipal
Auditor all of its financial records, and shall permit the Sangguniang Panlalawigan/
Panlungsod/ Bayan and the Provincial/ City/ Municipal Auditor to audit, examine,
and make excerpts or transcripts from such records, and to make audits of all
contracts, invoices, materials, payrolls, records of personnel, conditions of
employment, and other data relating to all the aforesaid matters.

Sec. 15. Review Power of the Sanggunian. The Sangguniang Panlalawigan/

Panlungsod/ Bayan, acting for the Province/ City/ Municipality as majority
stockholder, shall have no right, power, or duty to supervise the daily operations of
the Corporation, but shall oversee such operations through its powers to audit,
modify the Articles of Incorporation and By-Laws of the Corporation, to remove
Board members in accordance with the By-Laws of the Corporation, and to
participate in other matters where stockholder participation is required by law all for
the purpose of correcting any deficiency and ensuring that the purposes of the
Corporation are reasonably accomplished.

Sec. 16. Conflict of Interest.

(a) Except as provided in this section, a Board member or employee may not
participate in Board decisions if that person or a member of that persons
immediate family has a financial interest in the issue being decided, whether as
an individual or a director or holder of at least one percent (1%) of the shares of
a corporation, unless the financial interest is remote and participation is
approved under Subsection (b) of this section.

(b) A Board member or employee who has a financial interest, or who has an
immediate family member who has a financial interest in the issue to be decided,
whether as an individual or a director or holder of at least one percent (1%) of
the shares of a corporation, may participate in a decision if that person or a
member of that persons immediate family only has a remote financial interest,
the fact and extent of the interest is disclosed to the Board and is noted in the
minutes of the meeting before any participation by the member in the decision,
and thereafter the Board by vote authorizes or approves the participation. For
purposes of this Subsection, remote financial interest means:

81
 (1) that of a non-salaried officer or director of a non-profit corporation;
(2) that of an employee or agent of a contracting party where the compensation
of the employee or agent consists entirely of fixed wages or salary and the
contract is awarded by bid or by other competitive process;
(3) that of a landlord or tenant of a contracting party, except in cases where the
property subject of the lease or sublease is owned or managed by the
Corporation;
(4) that of a holder of less than one percent (1%) of the shares of the corporation
that is the contracting party; or
(5) that of an owner of a savings and loan bank savings or share account or credit
union deposit account if the interest represented by the account is less than
two percent (2%) of the total deposits held by the institution.

(c) A Board member or employee is not considered to be financially interested in a

decision when the decision could not affect that person in a manner different
from its effect on the public.

(d) No Board member or employee of the Corporation shall accept, directly or

indirectly, any gift, favor, loan, retainer, entertainment, or other thing of
monetary value from any person, firm, or corporation having dealings with the
Corporation when such acceptance would conflict with the performance of the
Board member or employees official duties. A conflict, or possibility of conflict,
shall be deemed to exist where a reasonable and prudent person would believe
that it was given for the purpose of obtaining special consideration or influence.

(e) The Board may adopt additional conflict of interest and ethical rules it considers
appropriate.

(f) For purposes of this section, participate in a decision includes all discussions,
deliberations, preliminary negotiations, and votes.

(g) For purposes of this section, immediate family means a spouse, any parent,
parent-in-law, child, son-in-law, daughter-in-law, sibling, or other relative within
the third degree of consanguinity or affinity.

Sec. 17. Bond. Each director or officer responsible for handling accounts and
finances shall, as soon as practicable, file a bond in an amount determined by the
Corporation to be adequate and appropriate, and may hold the corporate office only
as long as such a bond continues in effect.

Sec. 18. Amendment of the Articles of Incorporation. The Articles of Incorporation

may be amended by authority of the Board of Directors, subject to the approval of

82
the stockholders as may be required by law, or by an ordinance passed by the
Sangguniang Panlalawigan/ Panlungsod/ Bayan.

Sec. 19. Powers of the Sanggunian. Except as otherwise provided herein, all powers
of the Province/ City/ Municipality as majority stockholder of the Corporation shall
be reposed in and be exercised by the Sangguniang Panlalawigan/ Panlungsod/
Bayan.

Sec. 20. Dissolution.

(a) If the Sangguniang Panlalawigan/ Panlungsod/ Bayan makes an affirmative

finding that dissolution is warranted for any reason, the existence of the
Corporation may be terminated by ordinance adopted at or after a public
hearing held with notice to the Corporation and its Board of Directors and after
affording them a reasonable opportunity to be heard and to present testimony.
Dissolution shall be accomplished in accordance with the provisions of relevant
laws and shall not take effect until proper provision has been made for
disposition of all Corporation assets.

(b) Upon dissolution of the Corporation or the winding up of its affairs, title to the
remaining assets or property of the Corporation shall vest in the Province/ City/
Municipality unless otherwise provided by the Sangguniang Panlalawigan/
Panlungsod/ Bayan, by law, or by a court order.

Sec. 21. Repealing Clause. All ordinances, resolutions, or laws of local application
and effect inconsistent hereto are hereby modified, superseded, and repealed
accordingly.

Sec. 22. Separability Clause. If for any reason, any provision, section or part of this
Ordinance is declared unconstitutional or invalid by a court of competent jurisdiction
or suspended or revoked by the Sangguniang Panlalawigan/ Panlungsod/ Bayan, the
remaining provisions, sections, or parts hereof which are not affected thereby shall
continue to be in full force and effect.

Sec. 23. Effectivity. This Ordinance shall take effect fifteen (15) days after its
posting in two conspicuous places within the Province/ City/ Municipality.

83
 E. PROPOSED EXECUTIVE ORDER ON TIMELINES AND SCHEDULE
November 23, 2014

Executive Order No. [] Series of 20[]

AN EXECUTIVE ORDER PRESCRIBING AND SETTING THE SCHEDULES AND TIMELINES

FOR COMPETITIVE SELECTION, COMPETITIVE CHALLENGE AND COMPETITIVE
NEGOTIATIONS IN THE SELECTION OF THE PRIVATE SECTOR PROPONENT FOR
[PROVINCIAL/ CITY/ MUNICIPAL] [PUBLIC-PRIVATE PARTNERSHIPS/ JOINT
VENTURES]

1. Enabling Ordinance

This Executive Order is issued pursuant to and in furtherance of Ordinance No. []

Series of [] enacted by the Sangguniang [Panlalawigan/ Panglunsod/ Bayan]
(Sanggunian) of [name of LGU] entitled [long title] or the [short title].

2. Legislative Command

Under said Ordinance, the [Governor/ Mayor] is expressly mandated and authorized
to issue supplementary rules and regulations. The [PPP Code/ JV Ordinance] is
complete and bears explicit standards. It states:

Sec. []. Implementing Rules. While this Ordinance and the provisions
hereof are already operative upon the Codes effectivity, the [Governor/
Mayor] may issue the appropriate and relevant rules and regulation for
the proper implementation of the Code or its provisions.

Sec. []. Schedules and Timelines. The [Province/ City/ Municipality]

shall have the authority to adopt and prescribe the appropriate schedules
and timelines for each PSP selection process: provided, that the periods
are reasonable and will not undermine free competition, transparency
and accountability.

3. Schedules and Timelines

Under the foregoing premises and in compliance with the requirements of

competition, transparency and accountability, the [Governor/ Mayor] hereby issues

84
the following schedules, timelines and periods1 in connection with the selection of
the Private Sector Proponent (PSP), the establishment of the [Public-Private
Partnership (PPP)/ Joint Venture (JV)]-Selection Committee [PPP/ JV-SC], the
approval by the Sanggunian of the PPP/ JV Agreement [PPPA/ JVA], and award of
the [PPP/ JV] Project through Competitive Selection, Competitive Challenge or
Competitive Negotiations.

A. Competitive Selection

Steps/ Stage Days/ Periods

1. Preparation of Bid Documents: Pursuant to the [Provincial/ Within 60 days
City/ Municipal] Development Plan, programs and priorities, the from the
[Governor/ Mayor] shall direct the [PPP/ JV]-SC and/ or directive of the
appropriate provincial departments to prepare the Project [Governor/
Study (PS),2 draft PPPA/ JVA, Tender Documents such as Pre- Mayor]
Qualification documents and Requests for Proposals
(collectively referred to as Bid Documents) for a particular
[PPP/ JV] Project. The [PPP/JV]-SC shall prepare a cover
memorandum attaching thereto the Bid Documents. These
shall be submitted to the [Governor/ Mayor] for consideration
and approval.
1.1 Public Consultations: The [PPP/ JV]-SC shall conduct at least Within the same
one (1) public consultation about the Project with identified 60 day period
end-users, civil society organizations, affected public offices, (#1)
and other stakeholders.
2. Action of [Governor/ Mayor]: The [Governor/ Mayor] shall Within 10 days
either approve or disapprove the Bid Documents. If the from submission
[Governor/ Mayor] disapproves, the proposed Bid Documents of Bid
shall be returned to the [PPP/ JV]-SC for further study and Documents
revision. If the [Governor/ Mayor] confirms the
recommendation of the [PPP/ JV]-SC, s/he shall affix his/ her
signature to the cover memorandum prepared by the [PPP/ JV]-
SC. If the [Governor/ Mayor] takes an adverse position, s/he
shall issue a written resolution in support of his/ her action.
3. Publication of Invitation: After the approval of the Bid Within 5 days
Documents, the [PPP/ JV]-SC shall publish the Invitation to Pre- from the

1
In working days
2
A study prepared by the Province/ City/ Municipality in a competitive selection or a PSP when
submitting an unsolicited proposal, which indicates the following: needs analysis, affordability
assessment, value for money assessment, preliminary risk assessment, stakeholder assessment,
human resource assessment, bankability assessment, legal viability assessment, market testing if
relevant, indicative transaction implementation plan, and draft [PPPA/ JVA]. The Project Study may be
a feasibility study, pre-feasibility study or business case.

85
 Steps/ Stage Days/ Periods
Qualify and Bid/ Participate in the Competitive Competition in approval
one (1) newspaper of general circulation in two (2) consecutive
weeks.
4. Release of Bid Documents: The [PPP/ JV]-SC shall release the Within 30 days
Pre-Qualification Documents (PQDs) and the interested PSPs from date of 2nd
shall submit their PQDs to the [PPP/ JV]-SC. publication
4.1 No Interested PSPs: If there are no interested PSPs, the On the last day
[PPP/ JV]-SC shall declare a failed bidding. The [Governor/ to submit PQDs
Mayor] may shelve the Project, re-bid the same [PPP/ JV] (#4)
Project under the same or modified Bid Documents or the
[Province/ City/ Municipality] may accept Unsolicited Proposals
(UPs) for the [PPP/ JV] Project.
5. Pre-Qualification of PSPs: The [PPP/ JV]-SC shall pre-qualify Within 15 days
the PSPs that submitted PQDs. The [PPP/ JV]-SC shall determine from submission
which are the qualified and disqualified PSPs and notify the of PQDs
concerned PSPs of the action taken by the [PPP/ JV]-SC. The
[PPP/ JV]-SC shall prepare a memorandum justifying its action.
If none of the PSPs are qualified, then the [PPP/ JV]-SC shall
declare a failed bidding. The [Governor/ Mayor] may shelve the
Project, re-bid the same [PPP/ JV] Project under the same or
modified Bid Documents or the [Province/ City/ Municipality]
may accept UPs for the [PPP/ JV] Project.
5.1. Appeal: The disqualified PSP(s) may file an appeal of the Within 5 days
decision of the [PPP/ JV]-SC with the [Governor/ Mayor]. from receipt of
notice
5.2. Ruling on Appeals: The [Governor/ Mayor] shall evaluate Within 5 days
and decide the appeal(s). The [Governor/ Mayor] shall issue a from receipt of
written resolution in support of his / her action. appeal
6. Notice of Developments: The [PPP/ JV]-SC shall notify the Within 5 days
[Governor/ Mayor], [Vice-Governor/ Vice-Mayor], Sanggunian from notice to
and participating PSPs of the developments. concerned PSPs
(#5)
7. RFPs Issued: The [PPP/ JV]-SC shall issue the Request for Within the same
Proposal (RFP) to the qualified PSPs. 5-day period (#6)
8. Pre-Bid Conferences: The [PPP/ JV]-SC shall conduct at least All meetings shall
one pre-bid conference and set the deadline for the submission be conducted
of proposals. within 10 days
from notice to
concerned PSPs
9. Submission of Proposals: The pre-qualified PSPs shall Within 30 days
prepare and submit their technical and financial proposals from last pre-bid

86
 Steps/ Stage Days/ Periods
simultaneously. The technical and financial proposals shall be conference
submitted in one (1) sealed envelope.
9.1 No Proposal Submitted: (1) If there are no proposals
submitted by PSPs; (2) if none of the proposals are compliant
with the technical and financial parameters stated in the Bid
Documents; (3) if there is only one (1) proposal but such
proposal is only compliant with the technical aspects of the Bid
Documents; or (4) if there are several proposals where only one
(1) is compliant with the technical aspects of the Bid
Documents and the rest are not compliant with the technical
and financial aspects, the [PPP/ JV]-SC shall declare a failed
bidding. The [Governor/ Mayor] may shelve the Project, re-bid
the same [PPP/ JV] Project under the same or modified Bid
Documents or the [Province/ City/ Municipality] may accept
UPs for the [PPP/ JV] Project.
10. Evaluation of Proposals: The [PPP/ JV]-SC shall evaluate the Within 20 days
proposals and submit its recommendation to the [Governor/ from last day of
Mayor]. The [PPP/ JV]-SC shall determine the winning bidder/ submission of
PSP. If there are two (2) or more proposals that are compliant, proposals
the [PPP/ JV]-SC shall declare a successful bidding. The winning
bidder/ PSP shall be determined on the basis of the bid
parameters stated in the Bid Documents. The [PPP/ JV]-SC shall
prepare a memorandum justifying its action.
10.1 Limited Negotiations: (1) Should there be only one (1) Negotiations to
eligible PSP that submits technical and financial proposals be completed in
compliant with the Bid Documents; and (2) should there be 10 days
more than one (1) proposal but only (1) is compliant, the [PPP/
JV]-SC shall inform the [Governor/ Mayor] of any of this
development. The [Governor/ Mayor] may authorize Limited
Negotiations or declare a failed bidding. S/he may shelve the
Project, re-bid the same [PPP/ JV] Project under the same or
modified Bid Documents or the [Province/ City/ Municipality]
may accept UPs for the [PPP/ JV] Project. The negotiations will
cover all the technical and financial aspects of the [PPP/ JV]
project or activity; provided, that the minimum designs,
performance standards/ specifications and economic
parameters stated in the Bid Documents are complied with. The
[Governor/ Mayor] shall set or approve the terms of the
negotiations on the part of the [Province/ City/ Municipality]
which shall be the scope of the authority of the [PPP/ JV]-SC in
negotiating with the lone eligible PSP.
10.2 Best-and-Final-Offer: If there are no PSP that submits a BAFO must be

87
 Steps/ Stage Days/ Periods
technically and financially compliant tender but there are two submitted within
(2) or more proposals that are technically compliant but 10 days from the
financially non-compliant, the [PPP/ JV]-SC, upon approval by notice of the
the [Governor/ Mayor], can require the PSPs concerned to [PPP/ JV]-SC
submit their best-and-final-offers (BAFO) on the financial aspect
of the Bid Documents. The [Governor/ Mayor] can also declare
a failed bidding and may shelve the Project, re-bid the same
[PPP/ JV] Project under the same or modified Bid Documents or
the [Province/ City/ Municipality] may accept UPs for the [PPP/
JV] Project.
11. Action by [Governor/ Mayor]: The [Governor/ Mayor] shall Within 5 days
either confirm or reject the recommendation to award made by from submission
the [PPP/ JV]-SC. If the [Governor/ Mayor] confirms the of
recommendation of the [PPP/ JV]-SC, s/he shall affix his/ her recommendation
signature to the memorandum prepared by the [PPP/ JV]-SC. If by the [PPP/ JV]-
the [Governor/ Mayor] takes an adverse position, s/he shall SC
issue a written resolution in support of his/ her action. If the
[Governor/ Mayor] confirms, then the [PPPA/ JVA] shall be
submitted to the Sanggunian.
12. Notice to the Sanggunian: The [PPP/ JV]-SC shall inform the Within 2 days
[Vice-Governor/ Vice-Mayor] and the Sanggunian of the from the decision
developments. of the
[Governor/
Mayor]
13. Legislative Action: The [PPP/ JV]-SC shall forward to the Within 15 days
Sanggunian a copy of the draft [PPPA/ JVA]. The Sanggunian from receipt of
shall review and thereafter approve or disapprove the PPPA/ the draft [PPPA/
JVA or terms and provisions thereof. If the Sanggunian JVA]
approves, it shall issue a Resolution authorizing the [Governor/
Mayor] to sign the [PPPA/ JVA]. The Sanggunian may conduct
public consultation(s) with identified end-users, civil society
organizations, affected public offices, and other stakeholders.
14. Signing of [PPPA/ JVA]: Acting pursuant to the Resolution, Within 5 days
the [Governor/ Mayor] and the representative of the winning from receipt of
PSP shall sign the [PPA/ JVA]. Sanggunian
Resolution
15. Notice of Award: The [PPP/ JV]-SC shall issue the Notice to Within the 2 days
Award (NOA) to the winning PSP with the instruction to the from Signing of
latter to comply with the requirements set forth in the NOA. [PPPa/ JVA]
16. Compliance: The winning PSP shall submit to the [PPP/ JV]- Within 15 days
SC all the requirements stated in the NOA. from receipt of
NOA

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 Steps/ Stage Days/ Periods
17. Notice to Proceed: The [PPP/ JV]-SC shall issue the Notice to Within 5 days
Proceed and Notice of Acceptance (NP/NA) of all compliance from receipt of
statements and conditions precedent if the same are in order. conditions
precedent
18. Posting of [PPA/ JVA]: The [PPP/ JV]-SC shall cause the Within 2 days
posting of the signed and executed [PPA/ JVA] in at least two from issuance of
conspicuous places in and the official website of the [Province/ NP/NA
City/ Municipality].

B. Competitive Challenge

Steps Days/ Periods

Stage 1: Unsolicited Proposal ---
1. Receipt of UP: The [Province/ City/ Municipality] receives an ---
Unsolicited Proposal (UP) from the PSP. In order to be
considered complete, the UP must be accompanied by: (1) a
cover letter expressing interest in a [PPP/ JV] Project with an
undertaking to comply with all relevant ordinances, orders and
issuances; (2) Project Study (PS); (3) draft [PPPA/ JVA]; and (4)
eligibility documents of the PSP showing its legal, technical/
track record and financial capacities.
1.1 Public Consultations: The [PPP/ JV]-SC shall conduct at least ---
one (1) public consultation about the UP with identified end-
users, civil society organizations, affected public offices, and
other stakeholders.
2. Convening of [PPP/ JV]-SC: The [Governor/ Mayor] shall Within 2 days
convene the [PPP/ JV]-SC. from receipt of
UP
3. Sanggunian Informed of UP: The [PPP/ JV]-SC shall inform On the day the
the Sanggunian of the submission of the UP by the PSP. [PPP/ JV]-SC is
convened
4. Action of [PPP/ JV]-SC on UP: The [PPP/ JV]-SC shall evaluate Within 15 days
the UP and recommend appropriate action (either acceptance from the
or rejection of the UP) to the [Governor/ Mayor]. The convening of the
evaluation shall be confined to the determination: (1) of the [PPP/ JV]-SC
eligibility of the PSP to undertake the Project; (2) of the
consistency of the proposed Project with the development plan,
programs and priorities of the [Province/ City/ Municipality]; (3)
that the proposed [PPP/ JV] Project is not subject to
Competitive Selection/ Bidding by the [Province/ City/

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 Steps Days/ Periods
Municipality]; (4) that the UP is complete; and (5) legality of the
proposed terms of the draft PPPA/ JVA. The [PPP/ JV]-SC may
meet with the PSP only for the purpose of seeking clarification
and not to negotiate the terms of the UP. The [PPP/ JV]-SC shall
prepare a memorandum justifying its action.
4.1 Multiple UPs: If there are more than one UP submitted for [Governor/
the same [PPP/ JV] Project and no Certificate of Acceptance (CA) Mayor] confirms
has been issued and confirmed to any of the them, the [PPP/ JV]-SC
[Governor/ Mayor], upon recommendation of the [PPP/ JV]-SC, recommendation
may reject all proposals and pursue Competitive Selection, or within 3 days
accept the UP that is complete and provides the greater from receipt
advantage and benefits to the community and revenues to the
[Province/City/ Municipality]. The [PPP/ JV]-SC shall prepare a
memorandum justifying its action. If the [Governor/ Mayor]
confirms the recommendation of the [PPP/ JV]-SC, s/he shall
affix his/ her signature to the memorandum prepared by the
[PPP/ JV]-SC. If the [Governor/ Mayor] takes an adverse
position, s/he shall issue a written resolution in support of his/
her action.
5. Acceptance or Rejection of UP: The [Governor/ Mayor] shall Within 5 days
either accept or reject the UP. If the [Governor/ Mayor] accepts from receipt of
the UP as recommended by the [PPP/ JV]-SC, s/he shall issue a the
CA for the purpose of proceeding to Detailed Negotiations recommendation
(Stage 2). If the [Governor/ Mayor] rejects the UP as of the [PPP/ JV]-
recommended by the [PPP/ JV]-SC, a Certificate of Non- SC
Acceptance (CNA) will be issued. The [Governor/ Mayor] can
only affirm and approve the recommendation of the [PPP/ JV]-
SC. The [Governor/ Mayor] can disapprove the action of the
[PPP/ JV]-SC recommending the acceptance of the UP but s/he
cannot accept the UP if the [PPP/ JV]-SC recommends to reject
the UP. If the [Governor/ Mayor] confirms the recommendation
of the [PPP/ JV]-SC, s/he shall affix his/ her signature to the
memorandum prepared by the [PPP/ JV]-SC. If the [Governor/
Mayor] takes an adverse position, s/he shall issue a written
resolution in support of his/ her action.
6. Conformity by PSP: The PSP shall affix its conformity to the Within 2 days
CA. At this point, the PSP becomes the Original Proponent (OP- from receipt of a
PSP) and no other UP may be evaluated, processed and copy of the CA
accepted by the [Province/ City/ Municipality] and [PPP/ JV]-SC.
In the case of rejection of the UP, the PSP must acknowledge
receipt of the CNA.
7. Sanggunian Updated: The [PPP/ JV]-SC shall inform the Within 2 days

90
 Steps Days/ Periods
Sanggunian about the completion of Stage 1. from receipt of a
copy of the CA
signed by the
OP-PSP

Stage 2: Detailed Negotiations ---

1. Notification: The [PPP/ JV]-SC shall notify the OP-PSP in Within 2 days
writing about the commencement of the detailed negotiations. from receipt of a
copy of the CA
signed by the
OP-PSP
2. Scope of Detailed Negotiations: The [PPP/ JV]-SC shall Negotiations to
negotiate with the OP-PSP. The [Governor/ Mayor] shall set or be completed in
approve the terms of the negotiations on the part of the not more than
[Province/ City/ Municipality] which shall be the scope of the 30 days from
authority of the [PPP/ JV]-SC in negotiating with the OP-PSP. receipt of the
The parties shall negotiate and agree on the terms and OP-PSP of the
conditions of the JV Project concerning its technical and Notice
financial aspects (Terms). Minutes shall be taken of all
meetings. The negotiations may include the determination of
confirmation of the eligibility of the OP-PSP.
3. Recommendation to [Governor/ Mayor]: Upon agreement Within the same
on all the Terms of the Project and [PPPA/ JVA], the [PPP/ JV]-SC 30-day period
shall recommend to the [Governor/ Mayor] the acceptance of (#2)
the Terms of the [PPP/ JV] for the sole purpose of submitting
the Terms for Competitive Challenge (Stage 3). The [PPP/ JV]-SC
shall prepare a memorandum justifying its action.
4. Action of [Governor/ Mayor]: The [Governor/ Mayor] shall Within 5 days
either accept or reject the Terms of the [PPP/ JV] as negotiated from receipt of
between the [PPP/ JV]-SC and OP-PSP. If the [Governor/ Mayor] the
accepts the terms as recommended by the [PPP/ JV]-SC, s/he recommendation
and the OP-PSP shall issue a Joint Certification (JC) stating that: of the [PPP/ JV]-
(1) an agreement has been reached for the purpose of SC
submitting the terms for Competitive Challenge; (2) the
eligibility of the PSP; and (3) the technical and financial aspects
of the [PPP/ JV] Project as agreed upon. The [Governor/ Mayor]
may modify the Terms agreed between the [PPP/ JV]-SC and
OP-PSP, provided, the OP-PSP agrees to them. If the [Governor/
Mayor] confirms the recommendation of the [PPP/ JV]-SC, s/he
shall affix his/ her signature to the memorandum prepared by
the [PPP/ JV]-SC. If the [Governor/ Mayor] takes an adverse
position, s/he shall issue a written resolution in support of his/

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 Steps Days/ Periods
her action.
4.1 Non-Agreement: Should negotiations not result to an ---
agreement on the Terms of the Project, the [Governor/ Mayor]
shall have the option to reject the UP by informing the OP-PSP
in writing stating the grounds for rejection. In which case, the
[Province/City/ Municipality] may: (1) accept a new UP from
other PSPs; (2) decide to pursue the proposed activity through
other PPP Modalities; (3) subject the [PPP/ JV] Project to a
Competitive Selection; or (4) shelve the Project. The [PPP/ JV]-
SC shall prepare a memorandum in this regard.
5. Start of Stage 3: The issuance of the JC commences the ---
activities for Competitive Challenge (Stage 3) or the solicitation
for comparative proposals.
6. Sanggunian Updated: The [PPP/ JV]-SC shall inform the Within 2 days
Sanggunian of the developments and shall be furnished a copy from the signing
of the agreed Terms. The Sanggunian may issue a resolution of the JC
confirming the Terms.

Stage 3: Competitive Challenge ---

1. Preparation of Tender Documents: The [PPP/ JV]-SC shall Within 30 days
prepare the tender documents or terms of reference (TOR) for from the signing
the Competitive Challenge based on the agreed Terms. The of the JC
eligibility criteria used in determining the eligibility of the OP-
PSP shall be the same as those stated in the TOR. Proprietary
information supplied by the OP-PSP shall, however, be
respected and protected, and treated with confidentiality. As
such, it shall not form part of the TOR.
2. Submission to [Governor/ Mayor]: The [PPP/ JV]-SC shall Within the same
submit the TOR and draft [PPPA/ JVA] to the [Governor/ Mayor] 30-day period
for consideration and approval. The [PPP/ JV]-SC shall prepare a (#1)
cover memorandum.
3. Approval by [Governor/ Mayor]: The [Governor/ Mayor] Within 5 days
shall approve the TOR and draft [PPPA/ JVA]. S/He shall affix from receipt of
his/ her conformity to the [PPP/ JV]-SC memorandum. The the documents
[Governor/ Mayor] may introduce formal amendments to the from the [PPP/
TOR, provided, there is no substantive or material deviation JV]-SC
from the agreed Terms.
4. Publication of Invitation: The [PPP/ JV]-SC shall cause the Publication to be
publication in one (1) newspaper of general circulation in two made within 3
(2) consecutive weeks and posting in at least two (2) days from
conspicuous places and official website of the [Province/ City/ approval of the

92
 Steps Days/ Periods
Municipality] of the invitation for comparative proposals [Governor/
specifying the period whereby prospective challengers/ other Mayor];
PSPs must submit their written and notarized Expressions of EOIs must be
Interest (EOI) to participate in the Competitive Challenge. The submitted within
publication/ notice may state that if no EOI is submitted within 10 days from
the prescribed period, the [PPPA/ JVA] for the [PPP/ JV] Project date of 2nd
shall be awarded to the OP-PSP. publication
4.1 Posting of Bid Security: The OP-PSP shall post the proposal First day of
security on the date of the first day of the publication of the publication
invitation for comparative proposals in the amount and form
stated in the tender documents.
4.2 Action if no Challenger: If no EOI is submitted by a ---
challenger/ other PSP, the OP-PSP shall be awarded the contract
for the JV Project.
5. Release of TOR: If there is/ are EOI(s) submitted within the Within the same
period set, the [PPP/ JV]-SC shall furnish the interested PSPs the 10-day period
TOR for the Competitive Challenge after paying the required (#4)
amount set by the [PPP/ JV]-SC.
6. Submission of Eligibility Documents: Those PSPs which have Within the same
submitted their LOIs shall submit their respective eligibility 10-day period
documents showing their legal, technical/ track record and (#4)
financial capacities.
7. Eligibility Determination: The [PPP/ JV]-SC shall determine Within 15 days
the eligibility of the challengers/ other PSPs. Only those from the last day
determined to be eligible will be allowed to submit comparative of submission of
proposals and attend the pre-selection conference. The [PPP/ the LOIs
JV]-SC shall notify the PSPs determined to be eligible and
ineligible. The [PPP/ JV]-SC shall prepare a memorandum
justifying its action.
7.1 Appeal: The disqualified PSPs may file an appeal of the Within 5 days
decision of the [PPP/ JV]-SC with the [Governor/ Mayor]. from receipt of
notice
7.2 Ruling on Appeals: The [Governor/ Mayor] shall evaluate Within 5 days
and decide the appeal(s). The [Governor/ Mayor] shall issue a from receipt of
written resolution in support of his/ her action. appeal
8. Pre-Selection Conferences: The [PPP/ JV]-SC shall conduct at All meetings
least one (1) pre-selection conference with the OP-PSP and shall be
other eligible PSPs. conducted
within 10 days
from day notices
were sent to the

93
 Steps Days/ Periods
eligible PSPs
9. Submission of Comparative Proposals: The eligible Within 30 days
challengers/ other PSPs shall submit their comparative from receipt of
proposals on the financial and economic aspects of the [PPP/ JV] notice (#7)
Project as stated in the TOR. The challengers must agree to the
technical aspects of the TOR.
10. Evaluation: The [PPP/ JV]-SC shall evaluate the comparative Within 10 days
proposals. In the evaluation of proposals, the best offer shall be from receipt of
determined to include the original proposal of the OP-PSP. comparative
proposals
11. Notice to OP-PSP: If the [PPP/ JV]-SC determines that an OP-PSP to be
offer made by a comparative PSP or challenger other than the notified within 5
negotiated terms with OP-PSP incorporated in the TOR is days from
superior or more advantageous to the [Province/ City/ determination
Municipality] than the latter, the OP-PSP shall be given the right by [PPP/ JV]-SC
to match such superior or more advantageous offer. If there is that there is a
such an offer, the [PPP/ JV]-SC shall notify the OP-PSP of the superior offer
latters prerogative to match the offer by the challenger.
12. Right to Match: The OP-PSP shall exercise or waive its right Within 3 days
to match. Should no matching offer be received within the from receipt of
stated period, the [PPP/ JV] Project shall be awarded to the notice (#11)
challenger submitting the most advantageous proposal. If a
written matching offer is received by the [PPP/ JV]-SC within the
prescribed period, the [PPP/ JV] Project shall be awarded to the
OP-PSP.
13. Notice of Developments: The [PPP/ JV]-SC shall inform the Within 2 days
[Governor/ Mayor], Sanggunian, OP-PSP and challenger(s) of from receipt in
the outcome of the Competitive Challenge. writing of action
of OP-PSP
14. Legislative Action: The [PPP/ JV]-SC shall forward to the Within 15 days
Sanggunian a copy of the draft [PPPA/ JVA]. The Sanggunian from receipt of
shall review and thereafter approve or disapprove the PPPA/ the draft [PPPA/
JVA or terms and provisions thereof. If the Sanggunian JVA]
approves, it shall issue a Resolution authorizing the [Governor/
Mayor] to sign the [PPPA/ JVA]. The Sanggunian may conduct
public consultation(s) with identified end-users, civil society
organizations, affected public offices, and other stakeholders.
15. Signing of [PPPA/ JVA]: Acting pursuant to the Resolution, Within 5 days
the [Governor/ Mayor] and the representative of the winning from receipt of
PSP shall sign the [PPA/ JVA]. Sanggunian
Resolution

94
 Steps Days/ Periods
16. Notice of Award: The [PPP/ JV]-SC shall issue the Notice to Within the 2
Award (NOA) to the winning PSP with the instruction to the days from
latter to comply with the requirements set forth in the NOA. Signing of [PPPa/
JVA]
17. Compliance: The winning PSP shall submit to the [PPP/ JV]- Within 15 days
SC all the requirements stated in the NOA. from receipt of
NOA
18. Notice to Proceed: The [PPP/ JV]-SC shall issue the Notice to Within 5 days
Proceed and Notice of Acceptance (NP/NA) of all compliance from receipt of
statements and conditions precedent if the same are in order. conditions
precedent
19. Posting of [PPA/ JVA]: The [PPP/ JV]-SC shall cause the Within 2 days
posting of the signed and executed [PPA/ JVA] in at least two from issuance of
conspicuous places in and the official website of the [Province/ NP/NA
City/ Municipality].

C. Competitive Negotiations

Steps Days/ Periods

1. Preparation of Study and Recommendation: The PPP-SC shall Within 60 days
prepare the feasibility or project study, terms of reference for from the
the competitive negotiations, the draft PPPA, the possible list of directive of the
PSPs to be invited, and recommends to [Governor/ Mayor] the [Governor/
conduct of competitive negotiations for the PPP Project. Mayor]
2. Action of [Governor/ Mayor]: The [Governor/ Mayor] shall Within 5 days
accept or reject the recommendation of the PPP-SC. If s/he from submission
decides to accept, the [Governor/ Mayor] shall issue a of PPP-SC
Certification in this regard. recommendation
3. Final Roster of PSPs: The PPP-SC shall finalize the roster of Within 5 days
PSPs and secure their profiles and eligibility documents for from action of
specific PPP projects. Part of this list would be the PSPs which [Governor/
have unique specialization. Mayor]
4. Sending Out of Invitations: The PPP-SC, with the approval of Within 2 days
the [Governor/ Mayor], shall invite two or more qualified PSPs from finalization
to enter into negotiations with the [Province/ City/ of Roster
Municipality]. In the invitation, the PPP-SC shall state the PPP
project, the names of PSPs invited, the parameters of the PPP
project and the negotiations, and that simultaneous
negotiations will be conducted with all the identified PSPs.
5. Reply from PSPs: The invited PSPs shall submit in writing their Within 5 days

95
 Steps Days/ Periods
intentions to participate in the PPP project and enter into good from receipt of
faith and non-exclusive negotiations with the [Province/ City/ Letter-Invitation
Municipality].
6. Publication: The PPP-SC shall cause the publication in one (1) Within 2 days
newspaper of general circulation in two (2) consecutive weeks from last day to
and posting in at least two (2) conspicuous places and official file Reply
website of the [Province/ City/ Municipality] of the invitation for
competitive negotiations.
7. Conduct of Negotiations: The PPP-SC shall set the schedule Within 15 days
and conduct the negotiations with all the identified PSPs. The from publication
PPP contract shall be awarded to the PSP which offers the best
combination of quality and price based on the feasibility or
project study prepared by the [Province/ City/ Municipality].
The PPP-SC may conduct two (2) rounds of negotiations.
8. Notice of Developments: The PPP-SC shall inform all the PSPs, Within 2 days
Governor/ Mayor], and Sanggunian of the outcome of the from completion
negotiations. of Negotiations
9. Legislative Action: The [PPP/ JV]-SC shall forward to the Within 15 days
Sanggunian a copy of the draft [PPPA/ JVA]. The Sanggunian from receipt of
shall review and thereafter approve or disapprove the PPPA/ the draft [PPPA/
JVA or terms and provisions thereof. If the Sanggunian JVA]
approves, it shall issue a Resolution authorizing the [Governor/
Mayor] to sign the [PPPA/ JVA]. The Sanggunian may conduct
public consultation(s) with identified end-users, civil society
organizations, affected public offices, and other stakeholders.
10. Signing of [PPPA/ JVA]: Acting pursuant to the Resolution, Within 5 days
the [Governor/ Mayor] and the representative of the winning from receipt of
PSP shall sign the [PPA/ JVA]. Sanggunian
Resolution
11. Notice of Award: The [PPP/ JV]-SC shall issue the Notice to Within the 2
Award (NOA) to the winning PSP with the instruction to the days from
latter to comply with the requirements set forth in the NOA. Signing of [PPPa/
JVA]
12. Compliance: The winning PSP shall submit to the [PPP/ JV]- Within 15 days
SC all the requirements stated in the NOA. from receipt of
NOA
13. Notice to Proceed: The [PPP/ JV]-SC shall issue the Notice to Within 5 days
Proceed and Notice of Acceptance (NP/NA) of all compliance from receipt of
statements and conditions precedent if the same are in order. conditions
precedent
14. Posting of [PPA/ JVA]: The [PPP/ JV]-SC shall cause the Within 2 days

96
 Steps Days/ Periods
posting of the signed and executed [PPA/ JVA] in at least two from issuance of
conspicuous places in and the official website of the [Province/ NP/NA
City/ Municipality].

4. Right to Amend

The [Governor/ Mayor], depending on the nature and complexity of the [PPP/ JV]
Project and acting on the recommendation of the [PPP/ JV]-SC, may extend or
shorten the above-stated periods, provided, that the new schedule is reasonable,
applied fairly, will ensure free competition, transparency and accountability, and will
not prejudice vested rights of any PSP.

5. Effectivity

This Executive Order shall take effect upon approval hereof. Copies of this Executive
Order shall posted in at least two (2) conspicuous places and uploaded in the official
website of the [Province/ City/ Municipality], and disseminated and made available
to all interested parties.

97